Accounting for Non-current asset

                        

                                                     NON-CURRENT ASSETS


Noncurrent assets are cleverly defined as anything not classified as a current asset. The main line items in this section are long-term investments; property, plant, and equipment (PP&E); and goodwill and other intangible assets.

Long-Term Investments. This is money invested in either bonds with longer terms than one year or the stock of other companies. These aren't as liquid as cash and short-term investments, and prices may fluctuate, so it's possible that the value shown on the balance sheet may be too high or too low. If it's a big enough balance, you may want to dig into the details to make sure you're comfortable with the kinds of risks the firm is taking with shareholders' money.
Property, Plant, and Equipment (PP&E). These assets represent the bricks and mortar of a company: land, buildings, factories, furniture, equipment, and so forth. The PP&E amount on the balance sheet is typically reported net of accumulated depreciation--the total amount of depreciation recorded against the assets over their life. Eventually, PP&E has to be replaced, and depreciation is a company's best estimate of these "replacement" costs from wear and tear. Keep in mind that PP&E is usually not a very accurate measure of what a firm's bricks and mortar are really worth. Many times, buildings worth millions of dollars are reported at next to nothing in PP&E because of accumulated depreciation. Likewise, the actual value of a company's land--which is recorded in PP&E at its acquisition price--may be worth exponentially more than what is recorded.
Goodwill and Other Intangible Assets. Intangibles are, just as the name describes, assets that can't be touched and are generally not going to turn into cash. The most common form of intangible assets is goodwill. Goodwill is formed when one company buys another and pays more than the target company is worth (as defined by the net worth, or equity on the target's balance sheet).
You should view this line item with high levels of skepticism because most companies tend to pay too much when making acquisitions. Therefore, the value of goodwill that shows up on the balance sheet is often higher than what the intangible assets are really worth. Accounting rules require companies to value goodwill every year, and if a company lowers the value of the goodwill it records--a phenomenon known as impairment--it's a tacit admission that the company paid too much for an acquisition it made in the past.