Which of the following would be categorized as a fixed (long-term) asset?

Which of the following would be categorized as a fixed (long-term) asset?

• A. Patents and copyrights
• B. Accounts receivable
• C. Inventory
• D. Cash and cash equivalents

Answer: (A)

Long-term assets are resources that provide value for more than one year. Patents and copyrights are long-lasting intangible assets used in operations and are not expected to be converted to cash within the next year, so they are classified as long-term (fixed) assets. In contrast, accounts receivable is money owed by customers and expected to be collected soon, inventory is held for sale within the operating cycle, and cash and cash equivalents are already cash or near-cash, all of which are current assets. So patents and copyrights fit the long-term, non-current asset category.

Long-term assets are resources that provide value for more than one year. Patents and copyrights are long-lasting intangible assets used in operations and are not expected to be converted to cash within the next year, so they are classified as long-term (fixed) assets. In contrast, accounts receivable is money owed by customers and expected to be collected soon, inventory is held for sale within the operating cycle, and cash and cash equivalents are already cash or near-cash, all of which are current assets. So patents and copyrights fit the long-term, non-current asset category.