non-financial assets (2024)

FAQs

What is considered a non-financial asset? ›

non-financial assets. Definition English: An asset with a physical value such as real estate, equipment, machinery, gold or oil. For example, gold is considered a nonfinancial asset because it has inherent value based on its use in jewelry, electronics, dentistry, ornamentation and historically as currency.

Examples of non-financial assets include tangible assets, such as land, buildings, motor vehicles, and equipment, as well as intangible assets, such as patents, goodwill, and intellectual property.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

Impairment of non-financial assets other than inventories

General principles. 26.5 If, and only if, the recoverable amount of an asset is less than its carrying amount, the entity shall reduce the carrying amount of the asset to its recoverable amount. That reduction is an impairment loss.

Some common examples of non-financial liabilities include: Legal obligations - such as lawsuits, contracts, or fines. Operational liabilities - such as product recalls, environmental liabilities, or employee lawsuits. Reputational liabilities - such as negative public perception or brand damage.

Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets. Unlike land, property, commodities, or other tangible physical assets, financial assets do not necessarily have inherent physical worth or even a physical form.

Non-financial assets are tangible or intangible properties upon which ownership rights may be exercised. Financial assets are economic assets such as means of payment or financial claims. Financial liabilities are debts.

The financial account is the account of Financial Assets (such as loans, shares, or pension funds). The non-financial account deals with all the transactions that are not in financial assets, such as Output, Tax, Consumer Spending and Investment in Fixed Assets.

Fair value estimates are used to report such assets as derivatives, nonpublic entity securities, certain long-lived assets, and acquired goodwill and other intangibles. These estimates specifically exclude entity-specific considerations, such as transaction costs and buyer-specific synergies.

What assets are valued at fair value? ›

Fair value refers to the actual value of an asset – a product, stock, or security – that is agreed upon by both the seller and the buyer. Fair value is applicable to a product that is sold or traded in the market where it belongs or under normal conditions – and not to one that is being liquidated.

For example, if a share of Company A was valued at INR 30 over the last three months but is now INR 20, its market value is INR 20. An asset's market value depends on supply and demand in the market where it is bought and sold.

Non-current non-financial assets (such as property, plant and equipment (PP&E), intangibles and right-of-use assets) are required to be tested for impairment at the level of each individual asset if there is an impairment indicator.

To calculate the impairment of an asset, take the carrying value of the asset (its historical cost minus accumulated depreciation) and subtract its fair market value. If its fair market value is less than the carrying value, you will need to record an impairment loss for the difference.

A (loan) impairment allowance is a provision held on a balance sheet as a result of the raising of a charge against profit for impairment losses arising in a lending book.

Non-financial non-produced assets consist of natural resources (e.g. land, mineral and energy reserves, non-cultivated biological resources such as virgin forest, water resources, radio spectra and others), contracts, leases and licences as well as goodwill and marketing assets.

Examples of financial resources are funding from grants or credit, non-financial resources (e.g. goods, materials, capacity-building and volunteer time) and non-traditional funding sources (e.g. private investments and public–private partnerships, remittances, solidarity taxes, risk guarantees and insurances).

Non-financial transactions are exchanges of goods or services that do not involve the transfer of money. Some common examples include: Bartering: Exchanging goods or services without money changing hands. For example, a farmer trades vegetables from their garden for a haircut from the local barber.