Non Current Assets

This article explains how Non Current Assets are handled in Model Reef.

You will learn:

How long term assets are represented using Asset variables.
How capex and depreciation affect Non Current Assets.
How these assets link to cashflows and valuation.

What are Non Current Assets

Non Current Assets are assets that are expected to provide benefits over multiple periods. In Model Reef they usually include:

Property, plant and equipment.
Long lived equipment or vehicles.
Intangible assets such as capitalised development or licences.
Other long term investments if modelled via Asset variables.

They sit in the Non current Assets section of the Balance Sheet.

Asset variables and Non Current Assets

You represent Non Current Assets using Asset variables.

For each Asset variable you specify:

The amount of capex or opening balance.
The start date when the asset is in use.
The depreciation or amortisation pattern.
Any residual value or disposal assumptions if modelled.

Model Reef then:

Increases Non current Assets when capex or opening balances are recognised.
Reduces Non current Assets over time as depreciation or amortisation is applied.

Link to cashflows

Non current asset movements link tightly to cashflows:

Capex cash outflows appear in Investing cashflows in the Cashflow Statement and in the investing section of the Cash Waterfall.
Depreciation and amortisation reduce EBIT in the P&L but do not create cashflows directly.
The Balance Sheet holds the resulting asset balances through time.

This separation between capex and depreciation aligns earnings and cash properly.