- CFA Exams
- 2021 CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 22. Understanding Balance Sheets
- Subject 1. Components and Format of the Balance Sheet
CFA Practice Question
Long-lived assets refer to ______.
B. tangible fixed assets including plant and machinery
C. resources that are used to provide services to a company and are not bought with the intention of resale
A. assets that are held by a company for more than one year
B. tangible fixed assets including plant and machinery
C. resources that are used to provide services to a company and are not bought with the intention of resale
Correct Answer: C
Long-lived assets are used by the productive or administrative sides of a company to support the company's business but are not bought for resale; these include tangible and intangible assets. They do not include items such as inventory, although inventory could also be held long-term.
User Contributed Comments 6
| User | Comment |
|---|---|
| chamad | the other answers are not wrong but C is most appropriate! |
| rocyang | still, c doesn't refer to the "long-lived" part |
| Jurrens | "not bought with the intention of resale" relates to the long-lived part, seeing that the company keeps the asset for its entire useful life |
| 2014 | Investments in subsidiaries may support to the company and hence ... long lived |
| bidisha | more likely than not its the longer answer for descriptive q's |
| Ewan2015 | C is not correct a resource could meet the definition of C and not be a long lived asset if it is consumed within a year or a business cycle. For example prepayment of IT services for the year would be an asset and meet the above definition at C but would not be a long lived asset as it is a current asset. |