A non-financial asset is an asset that has a physical presence and value such as real estate, plant and equipment. By nature, such assets, once acquired and owned by an entity, are not traded on the market (active market) in the same manner financial assets are. The value of non-financial assets is derived from the economic benefits that can be attained by deploying them for an entity’s use. These assets have an economic life that extends beyond the accounting period, subjecting them, mostly, to depreciation testing on an ongoing basis.
Examples of non-financial assets include various types of tangible assets such as:
- Fixed assets such as PPE.
- Real estate (land, buildings).
- Commodities and physical inventory items.
Non-financial assets may also encompass other types of assets that are not classified as financial assets (i.e., intangible assets), including intellectual property, patents, and goodwill.
