What are long-term assets?
Long-term assets encompass items anticipated for use by a company for over a year, such as land, buildings, or equipment, recorded on the balance sheet as part of its assets.
Understanding the components of long-term assets
The components of long-term assets can be divided into tangible and intangible categories, further classified as current and non-current, distinguishing physical items like property from intangible assets such as patents.
Distinguishing long-term assets from long-term liabilities
Differentiating between long-term assets generating future economic benefits and long-term liabilities representing future obligations, with assets like property, plant, and equipment compared to liabilities like bonds and long-term loans.
Categorizing the three types of long-term assets
Three distinct types of long-term assets include property, plant, and equipment (PP&E), intangible assets like trademarks, and investments such as stocks and bonds.
Acquiring long-term assets in three ways
Exploring the means of acquiring long-term assets—through outright purchase, loan financing, or stock issuance, each method carrying its own financial implications.
Illustrating an example of a long-term asset
An example of a long-term asset could be a real estate property, where a company anticipates long-term ownership, expecting rental income and potential property value appreciation.