Assets may be divided into two main categories according to their continuity or “useful life”:
• Fixed assets: these are permanent resources that remain in the company for a long period of time (more than 3 years). No plans are made (at least in day-to-day company decisions) to get rid of them.
Several examples of active assets are the premises or buildings that belong to the company, or the van used to deliver products.
Fixed assets may also be called immobilized assets or non-current assets. All these definitions describe the same concept.
• Current assets: these are the elements that belong to the society but are to be used or passed on in the daily activity of the company. They usually remain in the company for a short term (usually less than a year).
Those assets are usually included in the action process of the society. Let’s take a bakery as an example: flour is a current asset, because even though it is available and is just another resource that belongs to the company, it will be used in the production process in a relatively short time. Flour will be used, for instance, to make bread, so that it will be transformed and sold and will no longer belong to the society. Further on, more flour will be bought, along with other raw materials, in order to carry on the production and ordinary activity of the company, which in this case involves baking bread.
As was the case with fixed assets, current assets may be given different names, such as non-capital assets or non-current assets. All the aforementioned definitions describe the same assets.