Current and Non-Current Assets Paper - Essay Example

For instance; accounts that are receivable are the owing by clients and these should be reflected in the balance sheet in the value realizable. To this those accounts whose collectibility is uncertain must be free of an allowance referred to as doubtful debts and thus should reflect the realizable value. The realizable value is the amount expected to be taken in cash form in reasonable terms. Cash equivalents are those securities that are near-cash like treasury bills of the US expected to mature in three-month time or in a shorter period.

Inventory on the other hand, may not always be liquid in conditions of crisis. For example; those commodities that are perishable in nature, high fashion goods, seasonal commodities, things subjected to obsolescence due to their technological nature or the items of trendy nature. Due to the fact that inventory can easily fall in value, it must be reflected in the balance sheet at the value lower of market and cost values. (Livingstone and Grossman, 2001) While currents assets are utilizable or consumable within a year, non-current assets are different in that they can be used fore more than one year.

Relatively non-current assets are costly and they aid a business to operate over a long time. Attention in the management of current assets is centered on their transportability and liquidity, but it’s different when it comes to non-current assets. Non-current assets demand attention because of their expensiveness in terms of cost and the long time horizon coverage. This nature of non-current assets calls for an extensive time view in acquisition, planning and management. Non current assets are usually acquired for utilization in the business operations and they are not purposed for resale.

They give to the businesses economic benefits for a period extending longer than one accounting period. They are classified into two categories; tangible and intangible. Tangible assets are also