Which statement is true about non-current assets?

Which statement is true about non-current assets?

• A. They are cash and cash equivalents held for 90 days.
• B. They are always amortized to zero each year.
• C. They are assets kept for more than one year and are categorized into tangible, intangible, and financial.
• D. They are only physical assets.

Answer: (C)

Non-current assets are items a business expects to use or hold for more than one year, not to be turned into cash in the near term. They fall into three broad groups: tangible assets like property, plant, and equipment; intangible assets such as patents, trademarks, software, and goodwill; and financial assets that are long-term investments or receivables expected to be realized after more than a year. This is different from current assets, which are meant to be converted to cash or used up within one year, like cash, cash equivalents, and inventories. Depreciation for tangible assets and amortization for intangible assets spread their cost over their useful lives, and not every asset is depreciated to zero each year (land, for example, is not depreciated). Non-current assets also include non-physical, or financial, holdings that aren’t intended to be turned into cash within a year. So, the true statement is that non-current assets are held for more than one year and are categorized into tangible, intangible, and financial.

Non-current assets are items a business expects to use or hold for more than one year, not to be turned into cash in the near term. They fall into three broad groups: tangible assets like property, plant, and equipment; intangible assets such as patents, trademarks, software, and goodwill; and financial assets that are long-term investments or receivables expected to be realized after more than a year. This is different from current assets, which are meant to be converted to cash or used up within one year, like cash, cash equivalents, and inventories. Depreciation for tangible assets and amortization for intangible assets spread their cost over their useful lives, and not every asset is depreciated to zero each year (land, for example, is not depreciated). Non-current assets also include non-physical, or financial, holdings that aren’t intended to be turned into cash within a year. So, the true statement is that non-current assets are held for more than one year and are categorized into tangible, intangible, and financial.