Non-current assets
Non-current assets are resources your business uses for more than a year. See types, examples and tax treatment.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Non-current assets are resources your business expects to use for more than 12 months, such as equipment, vehicles, software licences and long-term investments
- You record them at cost on your balance sheet, then spread that cost over their useful life through depreciation or amortisation
- Total non-current assets is the sum of each asset’s net book value: cost minus accumulated depreciation, amortisation and impairment
- Accounting depreciation isn’t tax-deductible in Malaysia, so you claim tax relief through capital allowances under Schedule 3 of the Income Tax Act 1967
What are non-current assets?
Non-current assets are resources your business owns and expects to use for more than 12 months to earn revenue. You might also hear them called long-term assets.
When you buy one, you capitalise the cost, which means you record it on your balance sheet instead of as an expense straight away. You then spread that cost over the years the asset helps you earn money. Picture a RM30,000 oven in a bakery: it bakes bread for years, so charging the full cost to one month’s profit would distort your results.
Fixed assets, the physical property and equipment you use every day, are one type of non-current asset. The wider group also takes in patents, software licences and shares you plan to hold for years, as Corporate Finance Institute explains.
The dividing line is timing. Assets you’ll turn into cash or use up within 12 months, or within your normal operating cycle if longer, are current assets. Everything else is non-current.
In Malaysia, this split comes from MFRS 101, part of the Malaysian Financial Reporting Standards (MFRS). The Malaysian Accounting Standards Board (MASB) makes MFRS mandatory for entities other than private entities. Private entities use the Malaysian Private Entities Reporting Standard (MPERS), a simpler framework.
Types of non-current assets
Non-current assets fall into four broad groups. Most small businesses hold tangible and intangible assets, while natural resources mainly matter to mining and forestry businesses.
Tangible assets
Tangible assets are physical items you can see and touch, such as shop lots, machinery, delivery vans and office furniture. They’re often called property, plant and equipment (PP&E), and you depreciate most of them over their useful life.
Land is the main exception because it usually has an unlimited useful life. MASB issues MFRS as a word-for-word adoption of international standards, and under MFRS 116, Malaysia’s version of International Accounting Standard (IAS) 16, you don’t depreciate land.
Intangible assets
Intangible assets have value but no physical form, such as trademarks, patents, software licences and goodwill from buying another business. Under MFRS 138, Malaysia’s version of IAS 38 on intangible assets, you amortise those with a finite useful life.
Intangibles with an indefinite useful life stay unamortised. Instead, you test them for impairment every year.
Long-term investments
Long-term investments are financial assets you plan to hold for more than 12 months. Examples include shares in another company or a fixed deposit that matures in two years.
Natural resources
Natural resources are assets taken from the earth, such as timber and minerals. You spread their cost over the period you extract them, a process called depletion.
Non-current assets examples
Here are some common non-current assets that Malaysian small businesses hold on their balance sheets. The mix depends on your industry.
- Land and buildings, such as a shop lot or factory you own
- Machinery and equipment, such as commercial ovens, computers and office furniture
- Company cars, lorries and delivery vans
- Renovations and fit-outs to a shop or office you rent
- Trademarks, patents and multi-year software licences
- Shares or fixed deposits you plan to hold for more than 12 months
- The long-term portion of prepaid expenses, such as years two and three of a three-year maintenance contract paid upfront
A construction company’s balance sheet might be dominated by excavators and lorries. A digital agency’s biggest non-current assets could be laptops and a registered trademark.
Current vs non-current assets
Current assets keep your day-to-day operations running, while non-current assets build your capacity over several years. Here’s how the two compare.
- Current assets turn into cash or get used up within 12 months; non-current assets stay in the business longer
- Current assets include cash, stock and trade receivables; non-current assets include property, vehicles, equipment and patents
- Current assets are collected or sold in the normal course of trade; non-current assets lose value gradually through depreciation or amortisation
- Current assets pay for this month’s bills; non-current assets help you produce goods or deliver services over time
The split shapes your working capital, the gap between current assets and current liabilities. Cash you put into a new machine is cash you can’t use to pay suppliers this month. The same 12-month test applies to what you owe, so your balance sheet also separates current and non-current liabilities.
How to calculate total non-current assets
You can work out total non-current assets in four steps. The result is the figure that appears on your balance sheet.
- List every asset you expect to hold for more than 12 months, including intangibles and long-term investments
- Note the original cost of each asset
- Subtract accumulated depreciation or amortisation, plus any impairment losses, to get each asset’s net book value
- Add the net book values together
For example, say you run a café in Petaling Jaya with these non-current assets at the end of the year.
- Your kitchen equipment cost RM60,000 and has RM18,000 of accumulated depreciation, so its net book value is RM42,000
- Your delivery van cost RM90,000 and has RM36,000 of accumulated depreciation, so its net book value is RM54,000
- Your three-year point-of-sale software licence cost RM9,000 and has RM3,000 of amortisation, so its net book value is RM6,000
- Your two-year fixed deposit of RM20,000 has no depreciation, so its net book value is RM20,000
Add them up and your total non-current assets come to RM122,000 (RM42,000 + RM54,000 + RM6,000 + RM20,000).
How non-current assets appear on the balance sheet
Non-current assets have their own section on your balance sheet. Lines usually start with property, plant and equipment, followed by intangible assets, investments and long-term receivables.
Each non-current asset is initially recorded at its original cost. That includes the purchase price and any costs to get it ready for use, such as delivery or installation. The balance sheet then shows its carrying amount, also called book value.
For example, say you bought a piece of equipment for RM10,000 and it has RM3,000 of accumulated depreciation. Its carrying value on your balance sheet is RM7,000.
MFRS 116 lets you choose how to measure each class of PP&E after purchase. The cost model keeps the asset at cost less depreciation and impairment.
The revaluation model carries it at fair value on the latest revaluation date, less later depreciation and impairment. That can suit property whose market value moves over time.
Depreciation, amortisation and impairment
Depreciation and amortisation spread an asset’s cost over the years it earns income for you, so each year’s profit carries its share of the cost. Depreciation applies to tangible assets and amortisation to intangible ones.
You can choose from several depreciation methods. Straight-line charges the same amount every year, such as RM2,000 a year on a RM10,000 machine that lasts five years.
Reducing balance charges a fixed percentage of the remaining carrying amount, so the charge is higher early on. It suits vehicles and computers that lose value quickly.
Impairment is a one-off write-down when an asset is worth less than its carrying amount. Under MFRS 136, Malaysia’s version of IAS 36 on impairment of assets, warning signs include physical damage, a sharp fall in market value or plans to stop using the asset.
When a warning sign appears, you compare the carrying amount with the recoverable amount.
Recoverable amount is the higher of fair value less costs of disposal and value in use. Value in use is the present value of the cash the asset should generate. If the carrying amount is higher, you write the asset down to its recoverable amount.
Disposing of non-current assets
When you sell or scrap a non-current asset, you remove it from your balance sheet and record a gain or loss. The gain or loss is the sale proceeds minus the asset’s carrying amount on the disposal date.
Say you sell the café’s delivery van for RM60,000 when its carrying amount is RM54,000. You’d record a RM6,000 gain in your profit and loss. Had you sold it for RM50,000, you’d record a RM4,000 loss instead.
The journal entry removes the asset’s cost and accumulated depreciation from your books. It also records the cash received and posts the difference as a gain or loss.
Capital allowances for non-current assets in Malaysia
In Malaysia, accounting depreciation isn’t tax-deductible, so you add it back when working out taxable income. Instead, you claim tax relief on qualifying non-current assets through capital allowances under Schedule 3 of the Income Tax Act 1967. You get an initial allowance in the year you incur the cost and use the asset, plus an annual allowance each year it’s in use.
PwC’s Worldwide Tax Summaries for Malaysia sets out these standard rates, calculated on the asset’s cost.
- General plant and machinery gets 20% initial and 14% annual allowances
- Heavy machinery and motor vehicles get 20% initial and 20% annual allowances
- Office equipment, furniture and fixtures get 20% initial and 10% annual allowances
- Information and communication technology (ICT) equipment and computer software get 40% initial and 20% annual allowances
- Small value assets costing RM2,000 or less each get a 100% annual allowance, with no initial allowance
Motor vehicles also have limits on how much of the cost qualifies. Small value asset claims are capped at RM20,000 per year of assessment, but that cap doesn’t apply to qualifying small and medium enterprises (SMEs), as EY’s summary of the Inland Revenue Board ruling explains.
Budget 2026 added a temporary accelerated capital allowance of 20% initial and 40% annual for qualifying plant, machinery and ICT equipment. It covers spending incurred 11 October 2025–31 December 2026, and machinery must come from local manufacturers, according to Grant Thornton Malaysia’s Budget 2026 summary. The Ministry of Finance will table Budget 2027 on 9 October 2026, so check for changes to these rates after that date.
Why non-current assets matter for your business
Non-current assets are the equipment, property and rights that let your business earn money year after year. Managing them well supports both your profit and your tax bill.
- Well-chosen equipment and vehicles earn revenue over their useful life, gradually paying back their cost
- Property and other valuable assets can often be used to secure business financing
- Capital allowances on qualifying non-current assets reduce your taxable income, lowering your tax bill
- Steady investment in assets shows lenders and investors you’re building capacity for growth
The trade-off is liquidity, because non-current assets take time to turn into cash. A manufacturer will naturally hold more of them than a consultancy. Either way, you need enough current assets to cover short-term bills, which you can check with liquidity ratios.
Track your non-current assets with Xero
An up-to-date asset register keeps your balance sheet accurate and makes capital allowance claims easier to prepare with your accountant. With Xero’s fixed asset management tools, you can record each asset, choose a depreciation method and let Xero work out depreciation for you. Try Xero today and get one month free.
FAQs on non-current assets
These answers cover more questions small business owners often ask about non-current assets.
Is a laptop a non-current asset or an expense?
A laptop you’ll use for more than a year is a non-current asset, but many businesses set a capitalisation threshold and expense items below it. Agree a sensible threshold with your accountant and apply it consistently.
Is prepaid rent current or non-current?
Rent you’ve paid in advance for the next 12 months is a current asset. A refundable tenancy deposit you’ll only get back when a lease ends more than 12 months from now is usually non-current.
Do you depreciate a shop lot you own?
You split the purchase price between the land and the building, then depreciate only the building. Leasehold land is different: under MFRS 16, the right to use leased land is usually depreciated over the lease, so check your title with your accountant.
What are non-current liabilities?
Non-current liabilities are debts due more than 12 months after your balance sheet date, such as a long-term bank loan or van hire purchase. The portion due within the next 12 months moves to current liabilities.
How do you record buying a non-current asset?
You debit the relevant asset account, such as motor vehicles, and credit your bank account or, if you bought on credit, accounts payable. After that, you post depreciation each period by debiting depreciation expense and crediting accumulated depreciation.
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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.