# 20. What is different between long-term and current assets?

 Sana 23.06.2022 Hajmi 15,22 Kb. #697544
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Accounting
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20. What is different between long-term and current assets?
The difference between current and a company’s long-term assets is that current assets are converted/used within a single operating cycle (inventory, work in progress, accounts receivable, etc.), whereas long-term assets have a useful life or more than a year and are used for multiple operating cycles (machines, buildings, etc.).
Current assets are easily can be converted in to cash. And it’s liquidity is very high. Long-term assets cannot be easily converted into cash. Because long term assets are building,property, car.

 40. The units of production method of calculating the depreciation

The units of production method assigns an equal expense rate to each unit produced. It's most useful where an asset's value lies in the number of units it produces or in how much it's used, rather than in its lifespan. The formula determines the expense for the accounting period multiplied by the number of units produced.
This formula is best for production-focused businesses with asset output that fluctuates due to demand.

Depreciation: (asset cost - salvage value)/estimated units over asset's lifetime x actual units made