What are non-current assets?

Published Thursday 23 July 2026

Table of contents

• What are non-current assets?
• Types of non-current assets
• Examples of non-current assets
• Non-current assets vs current assets
• How non-current assets are recorded
• Why non-current assets matter for your business
• How to calculate non-current assets
• Simplify your asset tracking with Xero
• FAQs on non-current assets

Key takeaways

• Non-current assets are resources your business owns and expects to use for longer than 12 months, such as property, equipment and patents.
• They appear on the non-current section of your balance sheet and lose value over time through depreciation or amortisation.
• Understanding your non-current assets helps you plan cash flow, manage tax deductions and make smarter investment decisions.
• Tracking non-current assets accurately gives you a clearer picture of what your business is really worth.

What are non-current assets?

Non-current assets are resources your business owns that provide value for more than 1 financial year. They're also called long-term assets or fixed assets, and they're not intended for quick sale or conversion into cash.

Think of them as the backbone of your operations. A delivery van, a commercial kitchen or a trademark all fall into this category because they support your business over the long term.

On your balance sheet, non-current assets sit below current assets. Their value is adjusted over time to reflect wear and tear or declining usefulness, giving you a more accurate view of what your business owns.

Types of non-current assets

Non-current assets generally fall into 3 categories. Understanding the differences helps you record and manage each type correctly.

Tangible non-current assets

Tangible non-current assets are physical items you can see and touch. These are often called fixed assets and include things like machinery, vehicles, office furniture and buildings. They lose value over time through depreciation.

Intangible non-current assets

Intangible non-current assets don't have a physical form, but they still hold significant value. Patents, trademarks, copyrights, goodwill and software licences are common examples. Their value is reduced over time through amortisation rather than depreciation.

Natural resources

Natural resources are assets extracted from the earth, such as timber, minerals or oil reserves. As these resources are harvested or mined, their value decreases through a process called depletion. This category is less common for small businesses but relevant in industries like agriculture and mining.

Examples of non-current assets

Non-current assets look different depending on your industry. Here are some common examples Australian small businesses might hold.

• Land and commercial property
• Vehicles, such as delivery vans or work utes
• Machinery and manufacturing equipment
• Office furniture and fit-outs
• Computer hardware and servers
• Software licences held for more than 12 months
• Patents and trademarks
• Goodwill from acquiring another business
• Long-term investments, such as shares held for growth
• Leasehold improvements to a rented shop or office

A cafe owner's espresso machine, a tradie's work vehicle and a consultant's long-term software subscription are all non-current assets. If it supports your business for more than a year and isn't meant for resale, it likely qualifies.

Non-current assets vs current assets

Current assets and non-current assets both appear on your balance sheet, but they serve different purposes and have different time horizons.

Key differences include:

• Current assets can be converted to cash within 12 months; non-current assets are held for longer than 12 months
• Current assets include cash, accounts receivable and inventory; non-current assets include property, equipment and patents
• Current assets fund your day-to-day operations; non-current assets support long-term growth
• Current assets are recorded at their current market value; non-current assets are recorded at cost and adjusted for depreciation or amortisation
• Non-current assets typically require larger upfront investment than current assets

Both types matter for your financial health. Current assets keep your business running daily, while non-current assets build your capacity to grow over time.

How non-current assets are recorded

Recording non-current assets correctly keeps your financial statements accurate and helps you claim the right tax deductions. Here's how the process works.

When you buy a non-current asset, you capitalise it. That means you record the full purchase price (plus any costs to get it ready for use) as an asset on your balance sheet, rather than treating it as an immediate expense.

Over time, the asset's value is gradually reduced. For tangible assets like equipment and vehicles, this is called depreciation. For intangible assets like patents, it's called amortisation. Both spread the cost across the asset's useful life.

On your balance sheet, non-current assets appear below the current assets section. They're typically listed at their original cost minus accumulated depreciation or amortisation, giving you the net book value. This figure shows what the asset is worth on paper at any point in time.

Why non-current assets matter for your business

Non-current assets play a bigger role in your business decisions than you might expect. Here's why they deserve your attention.

• They affect your borrowing power: lenders look at your non-current assets when assessing loan applications, because they can serve as security
• They influence your tax position: depreciation and amortisation create deductions that reduce your taxable income each year
• They shape cash flow planning: knowing when assets need replacing helps you budget for large expenses before they arrive
• They determine business valuation: if you ever sell your business, non-current assets are a major component of what buyers pay for

Keeping accurate records of your non-current assets means you're not caught off guard by unexpected costs, and you can make confident decisions about when to invest, replace or dispose of assets.

How to calculate non-current assets

Calculating your total non-current assets is straightforward. You can use this formula:

Total non-current assets = total assets - current assets

For example, if your business has $500,000 in total assets and $150,000 in current assets, your non-current assets equal $350,000.

You can also add up each non-current asset individually. Take the original cost of each asset and subtract its accumulated depreciation or amortisation to find its net book value. Then add all the net book values together.

Reviewing this figure regularly helps you understand how much of your business value is tied up in long-term resources and whether your asset mix supports your growth plans.

Simplify your asset tracking with Xero

Manually tracking non-current assets in spreadsheets is time-consuming and prone to errors. As your business grows, staying on top of depreciation schedules, asset values and balance sheet reporting gets harder.

Xero's cloud accounting software helps you manage your fixed asset register, automate depreciation calculations and keep your balance sheet up to date in real time. You can see what your business owns and track asset values, all from one place. Get one month free.

FAQs on non-current assets

Here are some frequently asked questions about non-current assets.

What is the difference between current and non-current assets?

Current assets can be converted to cash within 12 months, while non-current assets are held for longer than 12 months. Current assets fund daily operations; non-current assets support long-term business growth.

How are non-current assets depreciated?

Tangible non-current assets are depreciated over their useful life using methods like straight-line or diminishing value. The method you choose affects how much you can claim as a tax deduction each year.

Are non-current assets listed on the balance sheet?

Yes, non-current assets appear on your balance sheet below current assets. They're recorded at their original cost minus accumulated depreciation or amortisation.

What are examples of intangible non-current assets?

Common intangible non-current assets include patents, trademarks, copyrights, goodwill and long-term software licences. These assets don't have a physical form but still hold real value for your business.

Can a non-current asset become a current asset?

Yes, if you plan to sell or dispose of a non-current asset within the next 12 months, it's reclassified as a current asset. This might happen when you're replacing old equipment or selling property.