Glossary · Also called Fixed asset
Non-current asset
An asset the business keeps and uses for more than a year to help it operate.
What it means
An asset held for use in the business over more than one accounting period, not intended for resale.
Example
Premises, machinery and motor vehicles are non-current assets.
Why it matters
Non-current assets are usually depreciated over their useful life rather than charged as an expense at once.
In practice
Non-current assets come first in the assets section of the statement of financial position. They are shown at cost less accumulated depreciation, which gives the net book value. They are not bought to resell; they help the business trade year after year.
Suppose machinery costs RM30,000 and accumulated depreciation is RM12,000. It appears at a net book value of RM18,000. Each year a depreciation charge moves part of the cost into the income statement as an expense, spreading it over the asset's useful life.
Students often confuse a non-current asset with inventory, which is a current asset. A bakery's ovens are non-current because they make bread over many years. The flour and the finished loaves are inventory, bought or made to be sold quickly. If the bakery bought an oven to resell it, that oven would be inventory. Purpose decides the classification, not the physical object.
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Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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