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and equipment (PPE). In contrast, intangible assets means that, they cannot be seen,
touched or felt. Examples of intangible assets include, goodwill, patents, trademarks
and copyrights.

Other category of non-current assets are termed as natural resources. These include
resources that occur naturally, and are derived from the earth. Examples of natural
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resources include timber, fossil fuels, oil fields and minerals. Natural resources are also
known as wasting assets since once removed from the ground or physically consumed
they cannot be replaced. As a matter of illustration, reference is made by focusing on
natural gas to show how natural resources can be recorded in the books of accounts.
This type of non-current asset must be mined or pumped out of the ground for it to be
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used as source of energy or fuel. The value of natural gas is usually recorded on the
balance sheet at the cost of acquisition plus exploration and development costs, less
accumulated depletion.
Depletion is a process of allocating the cost of extracting natural resources until their
exhaustion similar to depreciation a used in accounting for PPE. As for intangible assets,
the allocation/charging of expenses over their useful time is called amortisation.
In this book however, we will focus more on the meaning and use of depreciation to
account for PPE, how it effects their valuation and relevant entries in the books of
accounts until their disposal.

Non-current
Assets

Tangible Assets
Intangible Assets Natural Resources
• Land
• Buildings • Goodwill • Mines
• Machinery • Patents • National reserves
• Vehicles • Trademarks and parks
• Equipments • Copyrights • Water bodies
• Mountains

Figure 7.1: Types of non-current assets

Measurement of non-current assets
Non-current asset can be acquired either through purchasing of a ready-made asset or
through self-construction. Examples of expenditure incurred for acquisition of non-current
assets include payments for purchasing land, ready-made building, and furniture and

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