Is Machinery A Current Asset Or A Non-Current Asset?
Machines are the supporting devices that help a business perform production tasks and make revenue by selling them. Machinery plays an essential role in generating revenue and it also helps a business to maintain a good fixed-asset turnover ratio.
Is Machinery A Current Asset Or A Non-Current Asset?
Machinery items are typically classified as fixed assets because they are depreciated over their useful life and these are bought to use in a business for a longer period normally more than one year, so they are recorded as non-current assets in the balance sheet.
The following are the reasons why machinery is included in the non-current assets.
- It is bought to use for a longer period
- It is depreciated over its useful life
- It is not intended to be sold immediately, etc.
How machinery account is shown in the statement of financial position:
| 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 Machinery A Current Asset and when it is classified as a current asset?
Machinery is generally classified as a non-current asset but if the machine is intended to sell within a year and it is reclassified as an asset held for sale then it is recorded separately and shown as a current asset in the balance sheet.
Why machinery is classified as a non-current asset most of the time?
Machinery is classified as a non-current asset because
- It is intended to be used in a business for a longer period normally more than a year
- It is depreciated over its useful
- And it is a little difficult to convert into cash within a short period.
What type of account is machinery?
It is a tangible asset that is classified as a non-current or long-term asset in the balance sheet.