Posted in Finance, Accounting and Economics Terms, Total Reads: 554
Definition: Non-Operating Assets
Non-Operating Assets are defined as those assets which are not required for current business operations which are currently going on but might benefit the company by generating some capital in the future.
The value of these assets is counted in finding out the total worth of business but is excluded in the estimation of future profit earning potential of business as they aren’t considered to be assets that will generate future earnings and revenue. These assets may be listed separately on the balance sheet or with other operating assets.
These assets do not directly help in the business operations but can be useful in the future. Selling off redundant assets can help generate some income for the organization.
Why it matters?
Companies must report their non-operating assets to reflect the overall financial picture. This would enable them to understand the various type of infrastructure that a company has, which has maximum utility and which ones can be disposed.
A piece of land(real estate) owned by a company on which no business activity is being carried on. It is an asset for business but does not contribute to the earnings of the business.