Long-term assets are assets that a business deems to be valuable and capable of providing benefits for multiple periods. These assets are typically not held for the purpose of resale and are therefore important to the success of the company. Understanding the types of long-term assets available and their examples can help businesses identify what these assets can do for the company.

Fixed Assets

One of the most common types of long-term assets are fixed assets. These are physical items that provide value to a business and benefit the company over many years. Examples of fixed assets include property such as buildings and land, equipment, tools, and other tangible items that can be used for production and operations. Typically, these assets have a large purchase cost, depreciate over time, and provide a company with an advantage over competitors by providing longevity and a renewed investment of capital.

Intangible Assets

Intangible long-term assets are “assets without physical form” and provide companies with financial benefits over time. Examples of intangible long-term assets include patents, copyrights, trademarks, and goodwill. Patents allow companies to protect inventions and associated royalties, copyrights restrict the usage of creative works, trademarks give businesses the exclusive right to use certain symbols, and goodwill can be allocated to the acquisition of another company. These assets are important because they provide the company with the ability to grow its operations and profitability.

Long-term Investments

Long-term investments are investments made in securities such as stocks and bonds and provide the company with a return of capital over a specified period of time. These investments are typically in stocks and bonds that are held longer than one year and may or may not be traded actively. For example, if a company purchases a large block of stock of a certain company and decides to hold the stock for many years rather than actively trading it, the company is performing a long-term investment. Long-term investments help companies diversify their portfolios and are a great way to spread risk and increase profitability.

Understanding the components of long-term assets and how they can benefit a business is important for its overall financial health. Long-term assets provide a means for a company to diversify its investments and to protect its financial future. The ability to properly manage and maintain these assets will provide businesses with the competitive advantage necessary to remain successful in today’s competitive market.