Long-term assets include long-term investments, property, plant, equipment, intangible assets. A Non-current assets that are not intended to be turned into cash or be consumed within one year of the balance sheet date. Meaning A long-term asset is one that continues to provide value for several years (A Company Office). This is also called a fixed assets. The term capital expenditures
When you enter your long term assets into the forecast, A system will calculate it’s monthly depreciation(Value it will loss over time) and deduct those amounts from the net available value of the assets.
Few common example of Long term assets could be computers, office furniture, building improvements, vehicles, etc. Most long-term assets slowly lose value, or depreciate, over their useful life
There are two types of funding sources for new assets you purchase 1. Cash or Investment 2. Loan, The “Cash / Investment” option should be selected if you expect to fund the purchase of the asset with cash from the company, or an investor. It you have received an equity or non-debt investment to purchase an assents make sure to add those investment value in Funding page.
If you plan to get a loan to pay for an asset (as in the company office example), be sure to add that loan separately in the Funding page as a loan(Debt). All we’re doing here is adding the asset itself. The funding used to purchase assets called capital expenditures.
Just focus here on long-lasting purchases like Property, land, equipment, vehicles, or furniture. You can also use this feature to spread out the expense of annual contracts or other short-term assets.
Here are the steps to enter long-term assets:
Click the ‘Add Assets’ button
Type: Enter Assets name and select Long term Assets type from Assets options :
Assets Value(Amount): How would you like to enter assets value? There could be either three way to entering amounts: 1. One time purchase, 2. Constant amounts over time(Recurring purchase) and 3. Varying amounts over time.
Depreciation: Depreciation will be calculated based on Useful life of assets and salvage value(Value at the end of useful life) of the assets.
Determining the useful life of a long-term asset : For a long term assets the minimum value of the useful life is more than one year because this assets are not intended to be turned into cash or be consumed within one year, The length of the useful life depends on what assets you purchase because variety of things can affect the useful life of an asset. For example, a truck you purchased for a company may only provide value to your business for 10 years, but the truck itself could last quite a bit longer than that.
Approximate determination of salvage value: Identify the value of the assets after end of it’s useful life, For example how much would you earn if you sell your truck to the scrap at the end of it’s useful life.
Do you have a plan to resell your assets?: If yes please enter the resell value and the date when you would resell it. The value would you receive will affect the cash-flow.
Some assets are non-depreciable(Example: Land), In that case you can check-mark the option ‘Do not depreciate’.
How assets reflects in various financial statements:
See how the assets reflects in all three main financial statements Profit & Loss statement, Balance Sheet and Cash-flow Statement as follow:
Where does the Assets appear in Profit & Loss Statement?
For a long term assets depreciation is an expense(Loss). When you resell the assets you either gain or loss the cash that affects the profit & loss statement. These values will be appear under the additional expense of the statement
Where does the Assets appear in Balance Sheet?
There is a separate section of the long term assets in balance sheet, You can review the gross long term and accumulated depreciation values in balance sheet as follow:
Where does the Assets appear in Cash-flow Statement?
In the Cash Flow, Assets purchase or sold amounts appear under the section ‘Net Cash from Investing’, The depreciation and gain and loss from the sale of assets appears under the section ‘Net Cash from Operations’.
Apart from the long term assets, Accounts receivable, Available cash are all the current or short term assets. Click to see how to add current assets.