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Non-current Assets: Types, Calculation and Examples

26 Nov, 2025

4 mins read

In accounting and financial analysis, understanding the role of assets is vital. Assets help define a company’s value, capacity to operate, and long-term financial health. One essential category of assets is non-current assets. These are long-term resources that play a key role in running and expanding a business.

In this blog, we’ll explain what non-current assets are, their types, how they are calculated, and why they matter.

What are Non-current Assets?

Non-current assets are assets that a business expects to use or hold for more than one year. They are not intended for immediate sale and are used to support business operations over time.

Unlike current assets, which are expected to be converted to cash within a year (like inventory or receivables), non-current assets include items like buildings, machinery, patents, and long-term investments.

These assets are often fixed and form the foundation of business operations. They are shown on the balance sheet under the assets section, usually listed after current assets.

Types of Non-Current Assets

There are several types of non-current assets, each serving a different purpose. Here are the main categories:

1. Tangible Assets

These are physical items that can be seen and touched. Examples include:

Land
Buildings
Machinery
Equipment
Vehicles

Tangible assets often depreciate over time due to wear and tear, except for land, which typically does not depreciate.

2. Intangible Assets

These are non-physical assets that provide long-term value.

Examples include:

Patents
Trademarks
Copyrights
Goodwill
Software (in some cases)

They usually arise through acquisition or internal development and may be amortised over their useful life.

3. Long-Term Financial Assets

These are investments made by a company that are not expected to be sold within a year.

Examples include:

Shares in other companies
Bonds held to maturity
Long-term deposits

These assets can generate returns over time and are not part of everyday operations.

4. Deferred Tax Assets

These arise when a company pays more tax than required and can claim a refund or offset it in future years. Though they don’t involve physical ownership, they offer future economic benefits.

Calculation of Non-Current Assets

Non-current assets are typically calculated using the formula:

Net Non-current Assets = Gross Non-current Assets – Accumulated Depreciation

Example:

Let’s say a company has the following:

Machinery: ₹10,00,000
Vehicles: ₹5,00,000
Accumulated Depreciation: ₹3,00,000

Net Non-current Assets = (₹10,00,000 + ₹5,00,000) – ₹3,00,000 = ₹12,00,000

In financial statements, each item is often shown separately with its original value and accumulated depreciation.

Difference Between Current and Non Current Assets

Understanding the distinction is crucial for financial analysis:

Feature	Current Assets	Non-current Assets
Time Horizon	Within 12 months	More than 12 months
Liquidity	High	Low
Purpose	Short-term operations	Long-term use
Examples	Cash, inventory, receivables	Land, machinery, patents
Depreciation/Amortisation	Not applicable	Usually applicable

Significance of Non-Current Assets

Non-current assets are vital for several reasons:

Support Business Operations: They include resources necessary for production, storage, and services.
Reflect Long-Term Strength: Investors often evaluate non-current assets to understand a company’s capacity for long-term growth.
Affect Profitability: Depreciation and amortisation of these assets directly affect a company’s net income.
Collateral for Loans: Banks may require physical non-current assets as collateral for business loans.
Influence Cash Flow: Though non-current assets are not liquid, their purchase or sale can have a big impact on cash flow.

Proper management and accounting of non-current assets are essential for accurate financial reporting and decision-making.

Examples of Non Current Assets

Here are common examples seen in businesses:

Office Building

A company headquarters used for daily operations.

Manufacturing Equipment

Machinery used in production lines that lasts for several years.

Patents

Legal rights to produce and sell a product for a certain period.

Equity Investment in Another Company

Shares held in another firm, not meant for immediate sale.

Land

Owned land used for factories, offices, or future development.

These assets are not meant to be sold quickly and are held to support long-term business goals.

Conclusion

Non-current assets are a key part of any company’s financial structure. They include both tangible and intangible resources that help run and grow the business. Understanding their types, calculation methods, and role in financial statements is essential for evaluating a company’s stability and long-term performance.

Whether you're an investor, a business owner, or a student of finance, knowing how non-current assets work gives you better insight into how businesses operate and plan for the future.