Nonmonetary Assets
Candlefocus EditorNonmonetary assets are classified under the balance sheet of a company, which is primarily divided into two types of accounts: assets and liabilities. Companies must report nonmonetary assets separately from monetary assets and liabilities as they require different methods of recognition and measurement in the accounting process.
Nonmonetary assets bring with them a certain amount of risk. For example, property, plant, and equipment may require a company to shell out a significant amount of money to maintain or to repair them. Alternatively, intangible assets like trademarks and copyrights may not be adequately protected and may be susceptible to theft or counterfeiting.
Overall, companies should recognize and be aware of the importance of nonmonetary assets, as it often provides greater potential to generate future cash flows. Even though nonmonetary assets require companies to invest more effort and resources, they often provide a greater level of protection from market turbulence. As such, companies should consider the value of their nonmonetary assets when evaluating how best to use their resources for their business.