Question

Question: Identify the main difference between (a) plant assets and current assets, (b) plant assets and inventory, and (c) plant assets and long-term investments.

Short answer

1. Plant assets are used in the company’s operations and Current assets are the assets which are used for short period.
2. Plant assets are held to perform company’s operations and Inventories are materials which helps in in achieving ultimate goal of resale.
3. Plant assets are used to perform business operations and long-term investments benefit the company for long period

Step-by-step solution

Plant assets and current assets

Plant assets are tangible assets used in a company’s operations that have a useful life of more than one accounting period.

Current assets are those assets that are held by the business to convert into cash or for use within a short period (within a year).

Plant assets and inventory

Plant assets are those assets that are held by the company to perform its operations. These assets are not for resale.

Inventory is the goal and materials that a business holds for the ultimate goal of resale.

Plant assets and long-term investments

Plant assets are those assets that a company held to perform its operations for more than one accounting period.

Long-term assets are an investment in a company that will benefit the company for many years.