What is investment in non-financial assets

Continuing to understand the financial terms, we will dwell today on investments in non-financial assets, which is, and for what they need. This term is mainly related to accounting and financial analysis, but this investor must understand in such spheres too.

Non-financial assets indicate investments in instruments that are not related to money. Under them imply fixed capital and non-production assets.

Investments in fixed capital are extremely important. It is they moving a business forward, help organizations develop and not stand still.

Investment in fixed capital

Tax legislation standards clearly define what can relate to the main capital. List its components:

• building;
• manufacturing machines;
• reconstruction;
• equipment;
• machines;
• vehicles;
• application programs;
• production inventory;
• tribal flock in the farm;
• technological lines;
• perennial cultures in agriculture;
• intellectual property;
• scientific developments;
• works of art;
• programs;
• information bases;
• inventions;
• useful models and industrial samples;
• Niiocr.

Investments in fixed assets are taken into account in accounting, as a rule, without VAT.

Investments in construction

Organizations can invest in non-financial assets in the construction of non-residential buildings or structures. Then they will have expenses for different construction work.

The main of them is the correct design of the building, construction, the cost of the materials used and the operation of the building. To properly design the building, you need to know all the original data, you need to make the geology of the soil, you need to understand the climatic features of the area, you need to be a professional in design. Construction costs include compliance with technologies and quality materials. Compliance with technology, first of all, the qualifications of the builders themselves and non-residential control over their work.

The second part is the costs of building materials that must comply with their declared characteristics necessary for the construction of a building by which it will be designed.

Summing up, non-financial investments in construction include the costs of obtaining permits, project manufacturing, all transportation costs, accommodation and salary of workers, overhead, purchase of material, the manufacture of all building designs, the foundation device and the subsequent installation of the building before commissioning, as well as input commissioned.

Intelligent property investments

Intellectual property is the most complex non-financial asset. Intellectual property and copyright existed in the Soviet Union. Authors' rights were among writers, poets, artists, songwriters, performers, musicians, composers and scientists. There were special organizations that paid the author's remuneration. For example, in the USSR, the largest copyrights rely on composers, so the bards - poets-songwrites-composers received the maximum rate.

Today in Russia for compliance with copyright, the Russian author's society (RAO) is watching. It consolidates the rights behind the authors and determines the author's remuneration. The authors have two rights: the right to authorship and the right to income from its work. If the author for money performed any work related to intellectual property for the remuneration, then the right to income it loses, but the right of authorship is not alienated.

Modern Russia appeared trademarks and brands, which also belong to intellectual property. Their registration and protection of the Patent Bureau is headed. Any citizen or legal entity may apply for a trademark name, verbal spelling, including font, color, size, and so on, as well as a visual image. Each category of goods and services has been assigned its class, so the trademark must be registered for each class separately. This means that you can use someone else's brand, but on another class. For example, TM "U Palycha" (cakes and pastries) can be used for furniture or freight. Not subject to registration as a brand commonly used names. For example, "bed" as a furniture brand, but the same word "bed" can be used to register the brand of clothing.

Registration in the Patent Bureau is engaged in patent attorneys. They serve information about the applicant, the class of goods or service, title, date. The trademark is also checked for a coincidence with already existing.

As other objects of intellectual property, which may also perform in the form of an investment project, are:

• computer programs;
• information bases;
• films;
• paintings;
• sculpture;
• graphics;
• design;
• literary writings;
• musical compositions;
• comics;
• domains;
• internet sites.

Investments in other types of fixed capital

Non-financial investments can also be in dwellings, in reconstruction and modernization. Housing includes the exercise costs of residential buildings, as well as social buildings. Reconstruction involves reorganization of fixed assets that already have an enterprise, as well as improving production methods. Modernization involves changing the technological or official purpose of fixed capital objects.

Accounting allocates other investments in fixed assets, such as expenses for:

• earthworks (landing, selection, gardening and others);
• cattle breeding (transportation and cultivation of young individuals);
• purchase of library funds and organization of archives in the enterprise;
• acquisition of weapons;
• purchase of animals for nurseries, zoos and for protection;
• training for construction;
• operation of drilling equipment;
• taxes and fees during construction;
• liquidation of property of the enterprise.

Other investment

There are investments in unproven non-financial assets. These include the costs associated with marketing, business reputation and land. If we talk about land, then information about investments in non-financial assets is submitted when the land plots and other environmental management facilities are submitted.

Marketing or business connections - a very subtle concept. It implies the establishment of a fruitful cooperation with both counterparties and clients. Business connections are closely related to the concept of "business reputation", which can even be appreciated in financial measurements. Protection of honor and advantage of the organization can be the subject of proceedings in court, and often the court falls on the side of the plaintiff, imposing a responsibility for the defendant to compensate losses in the loss of reputation.

The need for investment

The importance of such investments is difficult to overestimate. Regular and sufficient investments form an organization's production base, expand production, create a solid foundation for further development. If the business does not invest money, but only to take out of it, then it will be not developed to develop it, and will soon have to eliminate it. All initial investments in equipment, office, workshops and other over time are obsolete, wear out when used, and also deteriorate. Everything needs to be changed in a timely manner, and to take funds from investment.

Such investments need to declare and indicate information about investments in non-financial assets for founders and shareholders. The owners of the company must possess reliable and relevant information on the changes in business, as well as on the strategic goals and investment policies. Based on the information submitted by the head and accountant, they can calculate the profitability of the organization and, if necessary, to make their own adjustments.

In addition, regular investments in personnel should be made. And although they cannot be enrolled to reduce the taxable base, training costs and the increase in their qualifications will pay off with interest. First, employees will be able to better and effectively fulfill their employment responsibilities, and secondly, it increases the loyalty of the entire team. Personal care forms team cohesion, which, in turn, will increase business success.