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Long-term asset

A long-term asset is one that is consumed or used over a number of accounting cycles, from more than one year to 40 years.

Expanded Definition

The long-term asset accounts include assets such as land, buildings, equipment, and intangibles such as goodwill and accrued organizational expenses. It appears on the balance sheet.

While long-term assets are purchased either through mortgages, leases, or cash, that by itself is not an expense. That would be too easy. Instead, because of the matching principle, the asset is depreciated over its useful lifetime by charging a portion of the purchase price against revenue in each accounting cycle (e.g. quarter or year). That non-cash "expense" is associated with using the asset to generate revenue in that cycle.

The purchase of long-term assets usually shows up on the cash flow statement in the Plant, Property, & Equipment line item in the Investing section of the statement.

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