Long-term assets, also referred to as plant assets or fixed assets, are physical or intangible assets that a business holds and uses to produce revenue over an extended period of time. These assets can include land, buildings, equipment, and other tangible assets, as well as intangible assets like goodwill, patents, and copyrights. Long-term assets are typically not sold in the normal course of business as they are essential for a company's daily operations.
Long-term assets are divided into tangible and intangible categories.
- Tangible long-term assets are assets that have a physical presence and can be used for a longer period of time, typically more than one year or one operating cycle, whichever is longer. Examples of tangible long-term assets include land, buildings, equipment, and machinery.
- Intangible long-term assets, on the other hand, are assets that do not have a physical presence and can be used for an extended period of time. They generally consist of rights or advantages held by a business, such as goodwill, patents, copyrights, franchises, trademarks, and organizational costs.