What are long-term assets? Understand correctly to effectively manage business resources

In corporate finance, long-term assets are not only a measure of scale but also reflect the foundation of sustainable development of the enterprise. Understanding the concept, characteristics and management of this group of assets helps enterprises optimize investment capital, improve operational efficiency and enhance competitiveness in the market. Join SeABank to learn more about long-term assets in the article below to manage corporate finance more effectively.

Quick summary:

Long-term assets are resources controlled by an enterprise, bringing economic benefits in the future and having a use or recovery period of more than 12 months.

Characteristic:

• Low liquidity, difficult to convert into cash quickly.
• Bring long-term benefits, great value (over 10 million VND).
• Must be depreciated periodically during use.
• Usually accounts for a large proportion of total corporate assets.

Role:

• Demonstrates the financial potential and scale of operations of the business.
• Help maintain stable production and business activities.
• Is the basis for investors, partners and banks to evaluate financial health.
• Increase corporate value and reflect sustainable growth signals.

Classification (by Circular 200/2014/TT-BTC):

• Long-term receivables (Code 210)
• Fixed assets (Code 220)
• Investment real estate (Code 230)
• Long-term unfinished assets (Code 240)
• Long-term financial investment (Code 250)
• Other long-term assets (Code 260)

1. What is the concept of long-term assets?

Long-term assets are resources that a business controls and can obtain economic benefits in the future. These are assets that have a use or recovery period of more than 12 months or more than a normal production - business cycle, whichever is longer.

Long-term assets represent the foundation and development potential of the enterprise.

On the Balance Sheet, long-term assets are reflected in the "Long-term assets" (Code 200), including items such as:

• Long-term revenues
• Fixed assets
• Investment real estate
• Long-term financial investments
• Other long-term assets.

Unlike short-term assets, long-term assets reflect the value of all long-term investment resources, from factories, equipment, to financial investments. They often account for a large proportion of the total assets of an enterprise, especially manufacturing, industrial or real estate units.

In terms of accounting, current law does not stipulate a minimum value for “long-term assets”, but only specifically stipulates fixed assets – a part of the long-term asset group. According to the provisions of Circular 23/2023/TT-BTC and amended documents, an asset is recorded as a fixed asset when it simultaneously satisfies the criteria of value from VND 10,000,000 or more.go up and usage time over 1 year.

2. Overview of long-term assets

Before going into details, it is important to understand the general elements that make up this indicator:

• Definition of time: Includes assets with a useful life or recovery period of more than 12 months at the reporting date.
• Accounting principles: Reflects the total value of assets not in the group of current assets.
• Capital size: Demandlarge investment capital, often accounting for a significant portion of a business's total assets.

English name: Long-term assets.

Assets used for more than 12 months, reflecting the sustainable value of the business

3. Detailed characteristics of long-term assets

To further distinguish from short-term assets, long-term assets have the following characteristics as follows:

• Low liquidity: These assets are difficult to convert into cash in the short term due to their large value and high fixed nature.
• Long-term benefits: Enterprises own long-term assets with the expectation of generating economic benefits over many years,not just in one business cycle.
• Risk of value fluctuation: Long turnaround times result in risk of value fluctuation, affecting profitability and asset valuation.
• Lack of flexibility: Investing in long-term assets is often difficult to adjust or liquidate quickly, so businesses need to consider carefully before investing.

Depreciation over time: Tangible and intangible fixed assets in this group must periodically depreciate to reflect the decrease in value over time.

Long-term assets are recorded when they have a large value and are depreciated over their useful life.

4. The role and importance of long-term assets in business

Long-term assets are not just numbers on a financial statement, they also represent the operating platform and financial health of the business.

• Reflecting economic potential: Is an important infrastructure and foundation to help businesses maintain and expand production and business.
• Ensuring stable operation: Especially in manufacturing, industrial or banking sectors, long-term assets help maintain long-term operational stability.
• Financial assessment basis: Investors, partners and banks often rely on this indicator to assess financial strength, scalability, and credit worthiness of the business.
• Growth signals:The increase in fixed assets may reflect investment and expansion strategy, is a positive signal that shows the business is developing sustainably.

5. Types of long-term assets on the Balance Sheet (Code 200)

According to Form B01-DN – Circular 200/2014/TT-BTC - Sample of Enterprise Balance Sheet Report, issued under Circular No. 200/2014/TT-BTC, long-term assets are divided into6Main groups, reflecting in detail the long-term investment capital structure of the enterprise:

Investing in long-term assets such as machinery, equipment, factories or real estate plays an important role in expanding the scale of operations and improving the production capacity of enterprises. However, these investments often require large capital and long payback periods, so choosing the right financial solution is a key factor to help enterprises optimize capital efficiency.

SeABank provides comprehensive financial solutions to support businesses in investing and managing long-term assets effectively, including:

• Fixed asset investment loans: Support businesses to purchase, construct or renovate assets with loan terms up to 120 months. SeABank is currently implementing preferential loan programs according to business sectors.
• Payment & Cash Management Solutions: Helps businesses control revenue and expenditure, optimize cash flow and operate finances flexibly.
• Financing & Refinancing Solutions: Support capital restructuring, reduce interest costs and increase capital efficiency.

Businesses can refer to detailed products and services at seabank.com.vn or contact SeABank to get advice on a solution package that suits your investment needs and long-term development plans.

Long-term assets are an important factor reflecting the financial strength and development orientation of the enterprise in the long term. Managing, allocating and optimizing the long-term asset portfolio not only helps to improve the efficiency of capital use but also increases credibility.withbanks and investors