Financial Accounting · Statement of financial position

Non-Current Assets in the Statement of Financial Position

Updated 11 October 2026 · Fact-checked

Non-current assets, such as property, plant and equipment and intangible assets, appear in the statement of financial position at carrying amount. Carrying amount is cost (or revalued amount) less accumulated depreciation or amortisation and less accumulated impairment losses. To solve a question, find cost, subtract the accumulated charge, then deduct any impairment.

Understand Non-Current Assets in the Statement of Financial Position

A non-current asset is an asset a business keeps to use over more than one year. It is not bought to be resold in the normal course of trade. Examples are land, buildings, machinery, vehicles and patents.

In the statement of financial position these assets are not shown at what they cost forever. Each year the business uses them up. So you show them at carrying amount, which is the figure left after you remove the part already used up.

There are two main groups. Property, plant and equipment (PPE) is tangible: you can touch it. It is covered by IAS 16. Intangible assets have no physical form, such as software licences, patents and development costs that meet the recognition criteria. They are covered by IAS 38. Tangible assets are depreciated. Intangible assets with a finite life are amortised. The idea is the same: spread the cost over the useful life.

The cost of PPE includes the purchase price plus costs needed to bring the asset to its location and condition for use, such as delivery and installation. Running costs and repairs are not part of cost. They go to profit or loss.

Accumulated depreciation is the total depreciation charged on an asset since it was bought, up to the reporting date. It is not the charge for one year. The statement of financial position (or its note) shows cost, accumulated depreciation and carrying amount. Impairment is an extra write-down when the carrying amount is more than the asset's recoverable amount. It lowers carrying amount further.

Key formulas to remember

Carrying amount: Carrying amount = Cost (or revalued amount) − Accumulated depreciation − Accumulated impairment losses; For intangibles, use accumulated amortisation instead of depreciation.
Straight-line depreciation: Annual depreciation = (Cost − Residual value) ÷ Useful life in years; Use this unless the question gives another method.
Reducing balance depreciation: Annual depreciation = Carrying amount at start of year × Rate %; The base is carrying amount, not original cost. Residual value is not deducted first.
Accumulated depreciation: Closing accumulated depreciation = Opening + Charge for the year − Depreciation on disposals; Remove the depreciation of any asset sold.
Impairment: Impairment loss = Carrying amount − Recoverable amount (if carrying amount is higher); Recoverable amount is the higher of fair value less costs of disposal and value in use.

How to solve Non-Current Assets in the Statement of Financial Position questions

Use this order for any question on non-current assets in the statement of financial position.

1Identify the asset class: PPE or intangible. Keep each class separate.
2Write down cost (or revalued amount) at the reporting date. Add purchases and remove disposals at cost.
3Find opening accumulated depreciation from the question or the trial balance.
4Calculate the depreciation charge for the year using the stated method, rate and any part-year time.
5Add the year's charge to opening accumulated depreciation and remove the depreciation on any disposed assets.
6Deduct any impairment loss from carrying amount.
7Calculate carrying amount: cost less accumulated depreciation less impairment.
8Check that the figure shown is carrying amount, not cost and not the year's charge.

Quickest way: Cost less accumulated total

When to use it: Use this for objective test questions that give cost and accumulated depreciation and ask for carrying amount.

Underline what is asked: carrying amount, accumulated depreciation or charge.
Check whether the given depreciation is the annual charge or the accumulated total.
Work the whole year's charge first, then add it to the opening balance.
Subtract once: cost minus total depreciation minus impairment.
Sense-check: carrying amount must be below cost and not below zero.

Common mistakes in Non-Current Assets in the Statement of Financial Position

Showing the asset at cost in the statement of financial position.
Students forget that use reduces the asset's value in the books.
Fix: Always subtract accumulated depreciation and impairment. Report carrying amount.
Deducting only the current year's depreciation instead of the accumulated total.
The question shows the charge for the year and the opening balance is overlooked.
Fix: Add the year's charge to the opening accumulated depreciation first, then deduct the total.
Applying the reducing balance rate to cost every year.
Students copy the straight-line habit of using a fixed base.
Fix: Apply the rate to the carrying amount at the start of each year.
Leaving accumulated depreciation on assets that were sold.
Disposals are treated only as a cost adjustment.
Fix: Remove both the cost and the accumulated depreciation of the disposed asset.
Including repairs and running costs in the cost of an asset.
Any spending on an asset feels like part of its cost.
Fix: Capitalise only costs to acquire and prepare the asset. Charge repairs and maintenance to profit or loss.
Ignoring residual value in straight-line depreciation.
Students divide cost by life out of habit.
Fix: Deduct residual value from cost before dividing by useful life.

Worked examples

Example 1

At 31 December Year 2, a company's plant had a cost of $240,000 and accumulated depreciation at 1 January Year 2 of $72,000. Depreciation is 20% per year on a reducing balance basis. No assets were bought or sold in Year 2. What is the carrying amount at 31 December Year 2?

Show the solution

Carrying amount at 1 January Year 2 = 240,000 − 72,000 = $168,000.
Depreciation for Year 2 = 168,000 × 20% = $33,600.
Accumulated depreciation at year end = 72,000 + 33,600 = $105,600.
Carrying amount = 240,000 − 105,600 = $134,400.

Answer: $134,400

Example 2

A company bought a machine on 1 January Year 1 for $50,000, plus $2,000 delivery and $3,000 installation. It also paid $1,000 for staff training on the machine. Useful life is 5 years, residual value is $5,000, straight-line depreciation. At 31 December Year 2 an impairment review found a recoverable amount of $30,000. What is the carrying amount at 31 December Year 2 after any impairment?

Show the solution

Cost = 50,000 + 2,000 + 3,000 = $55,000. Training is not part of cost.
Annual depreciation = (55,000 − 5,000) ÷ 5 = $10,000.
Accumulated depreciation after two years = $20,000.
Carrying amount before impairment = 55,000 − 20,000 = $35,000.
Recoverable amount is $30,000, which is lower, so impairment loss = 35,000 − 30,000 = $5,000.
Carrying amount after impairment = $30,000.

Answer: $30,000

Exam tips

Read the last line first. Many options are traps: cost, the year's charge, and accumulated depreciation all look plausible.
In multiple response questions, check each statement against the definition of carrying amount before you select.
In number entry questions, work in the units given, enter only the number, and check the sign and rounding rule.
Check the purchase date for part-year depreciation and for the exact depreciation policy stated in the question.
Remember that land is normally not depreciated, but buildings are.

Practice questions from Statement of financial position

Non-Current Assets in the Statement of Financial Position in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Non-Current Assets in the Statement of Financial Position: frequently asked questions

What is the difference between cost and carrying amount?

Cost is what you paid to acquire the asset and make it ready for use. Carrying amount is cost less accumulated depreciation and impairment. Carrying amount is the figure on the statement of financial position.

How do I calculate accumulated depreciation for the statement of financial position?

Take the opening accumulated depreciation and add the depreciation charge for the year. Then remove the accumulated depreciation on any assets disposed of in the year. The result is the closing balance.

Are intangible assets shown at carrying amount too?

Yes. An intangible asset with a finite life is shown at cost less accumulated amortisation and impairment. The principle is the same as for PPE.

Does impairment reduce carrying amount?

Yes. If carrying amount is higher than recoverable amount, the asset is written down to recoverable amount. The loss is normally charged to profit or loss, unless it offsets a previous revaluation surplus on the same asset.