Noncurrent assets are resources a company expects to hold and use for more than one year, or longer than its normal operating cycle if that is longer. They include property, plant and equipment, intangible assets such as patents and trademarks, goodwill, long-term investments, deferred tax assets and long-term receivables. The term is another name for long-term assets, which explains the categories and their accounting in more detail.
How the term is used
On a classified balance sheet, assets are divided into current assets and noncurrent assets. Noncurrent assets is the wording used in IFRS, under IAS 1, and in many US filings, while long-term assets and fixed assets are common in general usage. Strictly, fixed assets refers only to tangible property, plant and equipment, which is one part of noncurrent assets.
Most noncurrent assets are recorded at cost and then depreciated or amortized over their useful lives, or tested for impairment. The classification matters for analysis: a company with a high share of noncurrent assets, such as a utility or railway, is capital intensive and usually needs long-term financing, while a business with mainly current assets, such as a distributor, relies more on working capital. Under IFRS 5, a noncurrent asset that management has committed to sell within a year is reclassified as held for sale, measured at the lower of its carrying amount and fair value less costs to sell, and is no longer depreciated. Ratios such as the asset turnover ratio show how efficiently these assets generate sales.