Nonmonetary assets

Nonmonetary assets
See also

Nonmonetary assets are assets for which is not possible to establish monetary value. Some assets are not able on the market, they could be created by the company and never put on the market. Thus their monetary value can be only estimated. They usually are also hard to convert into cash in case of problems with financial liquidity.

Most common nonmonetary assets are:

  • intangible assets
  • copyrights
  • patents created by the company
  • goodwill
  • some types of properties
  • some types of equipment or inventory

In some cases it is not clear whether the asset is monetary or nonmonetary asset. The most common criteria is whether the asset can be cashed in short time.

Companies can also have nonmonetary liabilities, e.g. warranty service of company products. It is unknown how many products will break in future and thus how much will the service cost. Some statistical analysis can help estimate those costs.

Intangible assets[edit]

Intangible and legal assets - are defined as property rights acquired by an entity, classified as non-current assets, which are suitable for economic use. The planned period of their use should exceed one year[1].

Intangible assets we can divide[2]:

  • proprietary copyrights, concessions, licenses, related rights
  • rights to inventions, patents, trademarks, utility and decorative designs
  • know-how
  • purchased goodwill
  • research and development costs

Intangible assets are characterized by[3]:

  • were acquired,
  • they are suitable for commercial use from the day of their acceptance
  • they have an anticipated period of use longer than one year,
  • they are used by the taxpayer for purposes related to his business activity

Depreciation a of intangible assets[edit]

Depreciation are made from the initial value of intangible assets. Charges should be made after the introduction to the register of intangible assets. The asset must be register no later than in the month of its transfer to using. Depreciation write-offs are made using depreciation rates specified in the Depreciation List or depreciation methods which company chose[4].

Copyright - refers to legal right of the owner of the intellectual property. This is a confirmation from the creator of a product, services – authorization to using his work. The person, company who buy copyright can exploitation of the work and deriving financial benefit from it.

Copyrights are used to protect[5]:

computer software, graphic designs, arts, poetry, novels, film, original architectural designs, musical lyrics and compositions website content

A patent is one of the form of intellectual property. A patent gives to the owner to exclude others from using, selling, making an invention for a limited period of time. A patent is granted to an inventor by the government. Kind of invention: machine, software, medicines. Patents are assets with an economic value. A patent is a very important protection tool used by enterprises in business. It Supports achieving a competitive advantage in the market.

Goodwill- it is a part of values of company. This is the difference between the purchase price and the fair value of the acquired net assets. Goodwill contributes to the growth of the market value of the entire enterprise.

We can distinguish[6]:

  • badwill - if the purchase price is lower than fair valued of the acquired assets
  • goodwill - if the purchase price is higher than fair valued of the acquired assets

Characteristics of non monetary assets[edit]

  • Non-monetary assets which change during a time and liquidity is limited.
  • This type of assets can losing value as the technology becomes obsolete.
  • To Non-monetary assets include fixed assets, such as property, plant and equipment, intangible assets, goodwill but also different unobvious positions.
  • To Non-monetary liabilities we can include assets whose are not payable in cash. For example, when company can provide warranty services on its products.
  • The value of the non-cash object can change over time. For example, (assets can loses its value over time). Also inflation can lower the value of the non-cash item.
  • Supply and demand (situation in the market) can affect the value of non-monetary. For example, (if competitors lower the selling price of a product, the value of the company's stock will also decrease)[7].



  1. J.A. Cohen, (2011)
  2. J.A. Cohen, (2011)
  3. J.A. Cohen, (2011)
  4. L.R. Patterson, (1991)
  5. L.R. Patterson, (1991)
  6. L.R. Patterson, (1991)
  7. T. Bishop, (2012)

Author: Anna Klisiewicz