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Glossary

Long-Term Assets

Long-term assets are tangible or intangible resources that a company holds for an extended period, typically more than a year, to support its operations and generate future revenue.

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.