Nonmonetary asset definition
/What is a Nonmonetary Asset?
A nonmonetary asset is an asset whose value can change over time in response to economic conditions. Examples of nonmonetary assets are buildings, equipment, inventory, and patents. The amount that can be obtained for these assets can vary, since there is no fixed rate at which they convert into cash.
Presentation of Nonmonetary Assets
Nonmonetary assets are not usually considered to be readily convertible into cash, or to be short-term assets. Consequently, they are more likely to be classified on the balance sheet as non-current assets. They are frequently classified within the fixed assets section of the balance sheet. However, inventory is also considered a nonmonetary asset, and that is classified as a short-term asset, on the grounds that it is expected to be sold within one year.
Monetary Assets vs. Nonmonetary Assets
Monetary assets convey a right to a fixed or easily determinable amount of cash, such as notes receivable and accounts receivable, making it easy to assign a monetary value to them. Thus, the difference between the two concepts is the ease with which a cash value can be assigned to monetary assets, but not to nonmonetary assets.