What are non-current assets?

Non-current assets are resources your business owns and expects to use for longer than 12 months to earn revenue. In Indonesia, they’re known as aset tidak lancar.

Think of a bakery’s oven. You’ll bake with it for years, so it’s a non-current asset, while the flour you’ll use this week is one of your current assets.

Indonesia’s financial accounting standards, Pernyataan Standar Akuntansi Keuangan (PSAK), were renumbered from 1 January 2024, and the renumbering table shows PSAK 1 is now PSAK 201. PSAK 201 asks you to show current and non-current classifications separately for assets and liabilities, unless a liquidity-based layout is more relevant.

Types of non-current assets

Non-current assets fall into four categories. The category decides how you write each asset down over time.

Tangible assets

Tangible assets are physical items such as buildings, machinery, delivery vans and furniture. They wear out with use, so you spread their cost over their useful life through depreciation.

Intangible assets

Intangible assets have no physical form but still hold value, such as patents, trademarks, goodwill and software licences. A patent expires after a set period, while a well-maintained trademark can last indefinitely. You amortise definite-life intangibles and review indefinite-life ones regularly for impairment.

Natural resources

Natural resources include oil, gas, timber and mineral deposits that your business extracts and sells. Their recorded value falls through depletion, which works like depreciation for resources taken from nature.

Long-term investments

Long-term investments are financial assets you plan to hold for more than one year, such as shares in another company. Your intention to hold them puts them in this group, even if you could sell them quickly.

Non-current assets examples

Most Indonesian small businesses hold a mix of physical and intangible assets. Common examples include:

land and buildings, such as a shop or warehouse
machinery and production equipment
vehicles, including delivery vans and motorbikes
computers and other office equipment
leasehold improvements, such as fit-out work on a rented shop
patents and multi-year software licences
goodwill from buying another business

The mix depends on your industry. A batik workshop in Yogyakarta might list looms and a shop fit-out, while a Jakarta software startup might list code and patents.

Capitalising vs expensing non-current assets

Capitalising records a purchase as an asset on your balance sheet. Expensing records it straight away as a cost in your profit and loss, which lowers this year’s profit.

A capitalised asset’s cost includes the purchase price plus any costs to get it ready for use. If you buy a coffee roaster, the delivery and installation charges become part of its cost.

In double-entry bookkeeping, you debit the asset account and credit cash or a loan account. Later spending on the asset needs its own decision:

expense routine repairs and maintenance that keep an asset working as before
capitalise improvements that extend an asset’s life or increase its capacity
capitalise major overhauls that replace a large part, such as a new engine for a delivery truck
expense small purchases that fall below your business’s capitalisation threshold

Current vs non-current assets

The main difference between the two is how quickly you can turn them into cash. Here’s how the two groups compare:

current assets turn into cash within 12 months, while long-term assets stay in use for longer
current assets are usually measured close to their cash value, while long-term assets are carried at cost less depreciation or amortisation
current assets include cash, accounts receivable, inventory and prepaid expenses, while long-term assets include property, vehicles, equipment and patents

This split matters when lenders calculate liquidity ratios, which compare your current assets with your short-term debts. Putting an asset in the wrong group can make your short-term position look stronger than it is.

The same 12-month logic applies to debts. Non-current liabilities are obligations you don’t need to settle within 12 months, such as long-term bank loans and lease commitments. Together with your non-current assets, they show your financial position beyond the next year.

How non-current assets appear on the balance sheet

Non-current assets have their own section on your balance sheet, separate from current assets. Each one starts at its capitalised cost. Over time, you subtract accumulated depreciation or amortisation, plus any impairment, to reach its carrying amount, also called carrying value or book value.

Say you bought production equipment for Rp100,000,000 and have recorded Rp30,000,000 of accumulated depreciation. Its carrying value is Rp70,000,000.

PSAK 216 (formerly PSAK 16) is the standard for aset tetap, or property, plant and equipment. It’s based on the international standard IAS 16, which allows a cost model, like the example above, or a revaluation model that updates carrying values to fair value. Check the requirements with your accountant before choosing revaluation.

Private businesses without public accountability can report under Standar Akuntansi Keuangan Entitas Privat (SAK EP) instead. It’s based on the International Financial Reporting Standard for Small and Medium-sized Entities. It replaced SAK Entitas Tanpa Akuntabilitas Publik (SAK ETAP) from 1 January 2025.

Depreciation and amortisation of non-current assets

Depreciation and amortisation spread an asset’s cost over the years it helps you earn revenue. You estimate its useful life, then choose a method. Two common methods are:

straight-line, which charges the same amount every year
declining balance, which applies a fixed percentage to the remaining carrying value, so charges are higher in early years

Take the equipment above. With a 10-year useful life and no residual value, straight-line depreciation is Rp10,000,000 a year, so Rp30,000,000 reflects three years of use.

Amortisation works the same way for intangible assets with a definite life, such as patents. Land isn’t depreciated, because it doesn’t wear out and has an indefinite useful life.

If an asset loses value unexpectedly, for example through damage, you record an impairment. This one-off write-down reduces its carrying value to the amount you expect to recover.

Under Standar Akuntansi Keuangan Entitas Mikro, Kecil, dan Menengah (SAK EMKM), you record assets at historical cost. That keeps depreciation simple, as it’s always based on what you originally paid.

Tax depreciation for non-current assets in Indonesia

Indonesian tax rules set their own useful lives, separate from your accounting estimates. Minister of Finance Regulation (Peraturan Menteri Keuangan, or PMK) 72/2023 sorts non-building assets into four groups.

The Directorate General of Taxes’ depreciation and amortisation guidance lists their useful lives:

four years for Group 1
eight years for Group 2
16 years for Group 3
20 years for Group 4

You can depreciate these groups using the straight-line or declining balance method. Permanent buildings are depreciated over 20 years and non-permanent buildings over 10 years, using the straight-line method.

Land is generally excluded from tax depreciation. Intangible assets are amortised for tax using the same four groups.

Because tax depreciation can differ from the depreciation in your accounts, your taxable profit and reported profit may not match. This guidance was last updated in May 2025. Check with a tax adviser which group each asset belongs to for the current tax year.

Why non-current assets matter for your business

These assets shape how lenders and investors judge your business. Here’s why they matter for planning:

they earn revenue over several years, supporting profit year after year
they often act as collateral when you apply for a bank loan
they show whether your business is growing or scaling back, based on how much you invest in them
they tie up cash, so large purchases affect how much you have for day-to-day costs

Your total assets minus your liabilities equals owner’s equity. Accurate asset values give you a true picture of what your business is worth on paper.

Track your non-current assets with Xero

Clear records of your business assets help you report accurately and plan your next big purchase with confidence. With Xero, you can track your fixed assets and let Xero calculate depreciation, so your balance sheet stays up to date. Try Xero today and get one month free.

FAQs on non-current assets

Here are quick answers to common questions on this topic.

Are non-current assets the same as fixed assets?

Fixed assets are one type of non-current asset: the tangible items, like buildings and machinery. The wider category also covers intangible assets and long-term investments.

Can inventory be a non-current asset?

No, stock you hold for sale is a current asset, because PSAK 201 treats assets you expect to sell or use within your normal operating cycle as current. The same item can be classified differently by different businesses: a car is stock for a car dealer but equipment for a business that uses it.

Is depreciation applied to all non-current assets?

Depreciation applies mainly to tangible assets that wear out. Long-term investments, such as shares in another company, aren’t depreciated; their balance sheet value can change with fair value movements or an impairment.

How often should you review non-current asset values?

Review useful lives and signs of impairment at least at each financial year end, and sooner if an asset is damaged or its market drops. A yearly physical check against your asset register also catches items you’ve sold or scrapped.

Why do lenders look at non-current assets?

Lenders compare the value of what you own with the debt you carry to judge how much you can safely borrow. Up-to-date carrying values and a clear asset register can make a loan application quicker.

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Disclaimer

This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.

What are non-current assets?

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