WHAT ARE LONG-LIVED ASSETS? TYPES AND CHARACTERISTICS OF LONG-LIVED ASSETS?

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.

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