Long-lived assets are assets which are expected to provide economic benefits for more than one accounting period.
They are assets which are expected to provide future economic benefits for a period longer than a year.
Long-lived assets are purchased with the intention of using them for more than one accounting period.
Examples of long-lived assets are land, equipment, patents and brands.
Long-lived assets can be divided into two broad categories, namely; tangible and intangible long-lived assets .
1. Tangible Long-lived assets: As is evident from its name, tangible long-lived are assets with physical form which are expected to be used for more than one accounting period.
They are long-lived assets which can be seen, felt and touched.
Tangible long-lived assets are also known as fixed assets or property, plant and equipment.
Examples of tangible long-lived assets are land, equipment, furniture
2. Intangible long-lived assets: These are assets which do not have a physical form but are expected to be used for more than one accounting period..
They are long-lived assets which can not be touched but are perceived to exist for accounting purposes.
Copyrights, trademarks, and patents are a few examples of intangible long-lived assets
Characteristics Of Long-lived assets
A long-lived asset has three qualities: it can be tangible or intangible, it can last for several accounting periods, and it can be depreciated or amortized.
1. Last for multiple accounting period: A long-lived asset, as is evident from its name, last for a long period usually extending more than one accounting period.
2. Tangible or intangible: A long-lived asset is either tangible or intangible. It is tangible if it has a physical form and intangible if it lacks a physical form.
Since a building has a physical form, it is a tangible long-lived asset. Because patents have no physical form, it is an intangible long-lived asset.
3 Depreciated or amortized: Long-lived assets are often depreciated or amortized over the course of their useful life, depending on the type of asset.
In general, intangible long-lived assets like patents and copyrights are amortized while tangible long-lived assets like buildings and equipment are typically depreciated.
It is important to clarify here that not all tangible long-lived assets are subject to depreciation.
Land, for instance, is a long-lived asset that does not depreciate.
It is also important to note that trademarks are not amortized because they typically retain their value indefinitely.