The word assets have several connotations. However when it comes to investment and finance assets pertain to money, savings, property, plant , equipment (PPE), stocks, bonds, patents, copyrights among several others. Long term assets are those assets that can be liquidities after a year.
Long term assets are not equal to immediate cash. However they are far more profitable than current assets. In order to understand long term assets in detail it is pertinent to understand the types of Long term Assets.
Long term assets are broadly classified into two categories: tangible and non tangible assets.
Tangible Assets: Tangible assets are those long term assets that are fixed. These assets cannot be immediately converted into cash. Property, plant and equipment (PPE) come under this category. Vehicles, machinery are also included in this. Also fixed assets are signifying things that you buy for the use of your company.
However stationary, office supplies and other raw materials that are used in one year are not included in tangible assets. Land, minerals, IT equipment, too is tangible assets. In the balance sheet they are written off against profits by accumulating depreciation expenses. Tangible assets are depreciated. An asset is useful till the duration it adds value to your business. Tangible assets can also be current assets such as cash, inventory and accounts.
Non Tangible Assets: Non Tangible assets are those assets that we cannot see but are of value. A few examples of non tangible assets are patents, trademarks, copyrights, computer programs among others. One can earn royalty from these assets for many years and are a good investment device.
Intangible assets are only recorded when bought. Example buying an established business, makes the price of intangibles such as trademark also goes up. Goodwill is a form of non tangible assets.