Is Furniture A Current Asset? How It Is Treated In Accounting
In business terms, furniture refers to those assets that help a business to do various activities especially these objects play an essential role in business operations.
Is Furniture A Current Asset?
No, furniture is not classified as a current asset because they are used in a business for a longer period or more than one year. These assets are depreciated over their useful life and are recorded in the balance sheet as long-term assets.
In short, furniture is not classified as a current asset because it is used in a business for a longer period typically more than a year or it is not expected to be sold or converted into cash within a short period, so they are classified as a non-current asset or long term asset.
The furniture recorded in the balance sheet looks like this:
| Non Current Assets: | |
| Property, Plant, and Equipment | xxx |
| Land | xxx |
| Building | xxx |
| Machinery | xxx |
| Vehicles | xxx |
| Furniture | xxx |
| Intangible Assets: | xxx |
| Goodwill | xxx |
| Trademark | xxx |
| Patents | xxx |
| Long Term Investments: | xxx |
| Stocks | xxx |
| Bonds | xxx |
| Non-Current Assets: | xxx |
Is furniture a current asset or not?
Furniture is not classified as current assets because they are depreciated over their useful life, they are not easily converted into cash, and they are bought with the vision of long-term use and not to sell within a short period.
Is furniture a current asset or a fixed asset?
Furniture is classed as fixed assets because it loses its value over its useful life.
Why furniture is treated as non-current assets in the balance sheet?
The following are the reasons why furniture is treated as current assets:
- They are expected to be used in a business for a longer period
- They are depreciated over their useful life
What type of asset is furniture?
Furniture is classified as a fixed asset in the balance sheet because they are not a liquid asset that can easily be converted into cash when needed.
When furniture can be classified as a current asset in the statement of financial position?
When a company becomes insolvent and is unable to pay its debt then its short and long-term assets become current assets and short and long-term liabilities become current liabilities as the company will close its all operations within a year.