Long-term asset

Definition

A long-term asset is a resource owned by a company that will provide economic benefits for more than one year. These assets are typically used in the operation of the business and not intended for quick sale.

5 Must Know Facts For Your Next Test

1. Long-term assets include property, plant, equipment, intangible assets, and investments that last over a year.
2. They are recorded on the balance sheet at their historical cost minus depreciation.
3. Depreciation expense related to long-term assets appears on the income statement.
4. The purchase of long-term assets is reflected in the investing activities section of the statement of cash flows.
5. Impairment losses can occur if the market value of a long-term asset drops significantly below its book value.

Related terms

Current Asset: Assets expected to be converted into cash within one year.

Depreciation:

The process of allocating the cost of a tangible asset over its useful life.

Impairment Loss:

A write-down recorded when an asset's carrying amount exceeds its recoverable amount.