Non-current assets
Learn what non-current assets are, the main types, and how they're recorded on your balance sheet.
Published Thursday 23 July 2026
Table of contents
Key takeaways
- Non-current assets, also called long-term assets, are things your business owns and expects to use for more than 12 months.
- They differ from current assets, which you expect to turn into cash within 12 months.
- Non-current assets are capitalised on the balance sheet, then depreciated or amortised over their useful life.
- They help generate revenue over the long term, add to your business value, and can be used as collateral for some loans.
What are non-current assets?
Non-current assets are things your business owns and expects to use for more than 12 months. You'll also see them called long-term assets, and they sit on your balance sheet alongside the shorter-term resources your business holds.
The 12-month mark is the key test. If you expect to use an asset, rather than convert it to cash, within a year, it counts as a current asset. If it will keep working for your business beyond 12 months, it's a non-current asset. Common examples include property, machinery, vehicles, and long-term investments.
Non-current assets vs current assets
The difference between the two comes down to time. Non-current assets support your business over the long term, while current assets are the resources you expect to use or convert to cash within 12 months.
Here's how they compare:
- Timeframe: non-current assets last longer than 12 months, while current assets are short-term
- Purpose: non-current assets help run and grow the business, while current assets cover day-to-day operations
- Liquidity: non-current assets aren't easily converted to cash, while current assets are highly liquid
- Examples: non-current assets include buildings and equipment, while current assets include cash, stock, and money owed by customers
Types of non-current assets
Non-current assets fall into a few broad groups based on what they are and how they're used. The three main types are tangible assets, intangible assets, and long-term investments.
Tangible assets
Tangible assets are physical items you can see and touch. This group is often called property, plant and equipment, and it also covers fixed assets such as buildings, land, machinery, vehicles, and computers. Natural resources like timber, minerals, and oil reserves are tangible assets too.
Intangible assets
Intangible assets have long-term value but no physical form. Examples of intangible assets include patents, trademarks, copyrights, goodwill, and software your business owns.
Long-term investments
Long-term investments are assets you plan to hold for more than 12 months rather than sell in the short term. These can include shares, bonds, or property held for investment. Deferred tax assets, which represent tax you can recover in future periods, also sit within this longer-term group.
How non-current assets are recorded on the balance sheet
Non-current assets appear in their own section of your balance sheet, separate from current assets. How you record them depends on their cost and how long they'll last.
Larger purchases that last beyond 12 months are capitalised, which means you record them as assets and spread their cost over time. Smaller day-to-day costs are expensed, so you record them in full in the period you incur them.
Once an asset is capitalised, you reduce its value gradually over its useful life. You depreciate tangible assets, and you amortise intangible assets. Both methods spread the cost across the years the asset helps your business earn revenue.
Why non-current assets matter for your business
Non-current assets shape how your business operates and grows. They're the resources that keep working for you well beyond a single year.
- Long-term revenue: assets like equipment and property help you produce goods and services for years
- Business value: a strong asset base adds to your overall worth and can be used as collateral for some loans
- Stability: owning long-term assets gives your business a steady foundation to plan and invest from
Keeping an accurate record of these assets also helps you understand your true financial position. Your balance sheet has a matching long-term side too, including non-current liabilities such as long-term loans.
Track your assets with Xero
Keeping tabs on your non-current assets is easier when everything lives in one place. Xero's cloud accounting software brings your finances together, so you can record assets, track depreciation, and see your balance sheet update in real time.
You'll spend less time on manual admin and more time running your business, with clear reports whenever you need them. Ready to get started? Sign up and get one month free.
FAQs on non-current assets
Here are answers to some frequently asked questions about non-current assets.
What is the difference between current and non-current assets?
Current assets are resources you expect to use or turn into cash within 12 months, such as cash and stock. Non-current assets are held for longer than 12 months, such as property and equipment.
How are non-current assets depreciated?
You depreciate tangible non-current assets by spreading their cost across the years they help your business earn revenue. Intangible assets follow the same idea, but the process is called amortisation.
Are non-current assets the same as fixed assets?
Fixed assets are a type of non-current asset, covering physical items like buildings and machinery. Non-current assets is the wider term, which also includes intangible assets and long-term investments.
Where do non-current assets appear on the balance sheet?
Non-current assets sit in their own section of the balance sheet, separate from current assets. They're usually listed at their cost, less any depreciation or amortisation to date.
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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.