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wencc
Aug 16, 2010, 04:58 AM
What mean of non-current asset?
How come cash and receivabls can be non-currents assets?

morgaine300
Aug 16, 2010, 07:57 PM
Current assets are ones that will be used or realized within one year. So any asset not fitting that description is a non-current assets.

A receivable can easily be non-current if it's going to be longer term before you collect it. Your typical "accounts receivable" (or trade receivables) would be collected in anywhere from 10-60 days or so, but fairly current. But you could have a note receivable from someone that is not due for 5 years. Think about a bank: they have a lot of non-current receivables.

Cash can also be non-current if it's not available for use. A compensating balance is a good example. That's where you must maintain some balance for some specific reason, like you have a loan with a bank, and you must maintain some minimal amount in an account with that bank during the loan period. (Like 10% of the outstanding loan amount or whatever.) If a portion of that compensating balance has to remain over a year, then it becomes non-current. Even if the cash could technically be used, the intent is not to use it.