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ISSUES OF THE ESSENCE AND CLASSIFICATION OF LONG-TERM ASSETS
Gozieva Mokhira Rustamovna
Assistant of the Department of Accounting, TSUE
e-mail: mokhira.gozieva@mail.ru
ORCID: 0009-0006-6758-8007
Abstract:
This article analyzes the theoretical issues of long-term assets in accounting. In
various approaches, such assets in regulatory documents are presented as resources purchased by
enterprises for shares, bonuses or long-term exploitation. Also, long-term financial investments
and assets recognized as investment property are considered one of the effective directions for
future capital investment. Therefore, it is urgent to reconsider the classification and
characteristics of long-term assets.
Keywords:
long-term assets, principles, development trends, costs, royalties, law,
uncertainty, practice, attitude, investment, investment property.
Introduction.
An enterprise must have the necessary economic resources for its effective
operation, since it is these resources that are the main factor in the production of goods or
services. The expansion of market relations is increasing competition in the economy, and in this
environment, economic entities that are able to use existing resources rationally and purposefully
gain an advantage. In economic theory, all tangible and intangible assets used by an enterprise in
its production activities are called assets.
In the process of adapting to international financial reporting standards in Uzbekistan,
assets began to be divided into two types - long-term and short-term assets. This new approach
differs from the classification in the previous standard accounting plan - long-term and current
assets.
Assets are classified as long-term if they meet the following conditions:
• must be acquired for use in the production or service activities of the enterprise;
• they must be intended for permanent use, not for sale;
• must have a useful life of more than one year.
The main purpose of long-term assets is to be used effectively in the production of
products, the provision of services, and the sale of goods. They can also be used for rental,
administrative purposes, or to maintain fixed assets in working condition.
Review of relevant literature.
Long-term assets are the main economic tool for the
effective implementation of production and service activities of an enterprise. In enterprises
operating in the manufacturing sector, a significant part of the property belongs to this type of
assets [12]. The condition of these assets and the level of their effective use directly affect the
economic results of the enterprise.
Through the full and targeted use of long-term assets, all technical and economic indicators
of the enterprise are improved: increased labor productivity, increased return on funds, increased
production volumes, reduced costs, and savings on capital investments are ensured[21]. In such
conditions, it is important to properly conduct economic analysis in order to make rational
management decisions and implement them in practice[3].
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In today's market economy, accounting serves as a reliable and excellent source of
information for the management of the enterprise and its owners. It remains an important tool in
forming product costs and prices, controlling the process of effective use of long-term assets, and
assessing investment potential[23].
The economic reforms being implemented in Uzbekistan are aimed at fundamentally
renewing the structure of the economy and its sustainable development. In this process, it is
important to identify the liberalization and modernization of private property relations as one of
the priority tasks[3]. At the same time, there is a need to eliminate ambiguities in the concepts of
the criteria for assessing and classifying long-term assets. In particular, in countries whose
economies are transitioning to market principles, including Uzbekistan, the valuation principles
and criteria used in accounting need to be clarified[24].
As market relations develop, current accounting policies prevent the correct reflection of
new types of assets in financial statements. For example, objects such as royalties, goodwill, the
right to occupy land plots as property, long-term receivables, deferred expenses, long-term
financial investments and leasing relations are not sufficiently reflected in accounting
practice[22]. The above circumstances indicate that the accounting of long-term assets requires a
comprehensive study of theoretical, legal, organizational and methodological aspects. This
makes the need for the formation of perfect accounting mechanisms for them even more urgent.
According to I.I. Ismanov, capital turnover is divided into fixed and working capital. Fixed
capital restores its original value over several cycles, whereas working capital regains its
previous form after a single turnover.
Based on the turnover of capital, fixed capital value is split into two parts. One part
becomes part of finished goods and is realized as cash through sales and recorded as depreciation.
The other remains in production as material or intangible capital.
Working capital transfers its entire value into products during one cycle, fully transforming
into the value of new products.
Results.
The analysis of the current state of long-term asset classification and accounting
leads to the following results:
1. Alignment with IFRS: The introduction of the terms “long-term” and “short-term” assets
aligns national accounting practices with international standards but requires further
refinement for effective application.
2. Comprehensive scope: Long-term assets should include not only tangible fixed resources
but also intangible assets, financial investments, and other elements that generate future
economic benefits for more than one year.
3. Regulatory improvement: The definitions in the Law “On Accounting” and IFRS
Standard No. 1 need to be updated. Using the term “long-term” instead of “main” and
expanding the definition to cover shares, premiums, and property rights would better
reflect the true nature of assets.
4. Practical effect: Accurate classification and valuation of long-term assets ensure
transparency of financial statements, improve investment attractiveness, and support
rational managerial decisions.
5. Strategic significance: Effective management and utilization of long-term assets
contribute to productivity growth, cost reduction, and sustainable enterprise development.
In conclusion, the results confirm the urgent need to improve methodological and
regulatory frameworks for accounting of long-term assets in Uzbekistan, ensuring both
compliance with international standards and relevance to national economic conditions.
Analysis.
The study of long-term assets in the context of Uzbekistan’s transition to
international financial reporting standards reveals several important aspects. First, the
classification of assets into long-term and short-term represents a new stage in accounting
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practice, replacing the former division into fixed and current assets. This approach aims to reflect
more accurately the economic essence of enterprise resources.
Second, the criteria for long-term assets—use in production or service activities, intended
permanent utilization, and a useful life exceeding one year—highlight their fundamental role in
enterprise operations. Their primary purpose is not only direct participation in production but
also support of administrative functions, leasing, and investment activities.
Third, the expansion of the scope of long-term assets beyond tangible fixed capital shows
the increasing importance of intangible resources, financial investments, deferred expenses, and
property rights. These elements, though not always directly involved in production, provide
long-term economic benefits and enhance the investment potential of enterprises.
Fourth, the process of correct recognition and reflection of long-term assets in financial
statements remains a challenge. Ambiguities in classification and valuation create obstacles for
accurate reporting and for management to make sound economic decisions. This problem is
especially evident in economies undergoing structural reforms and adapting to global standards.
Finally, the analysis shows that the existing legal definitions and accounting standards do
not fully capture the multi-dimensional nature of long-term assets. This leads to inconsistencies
in practice and highlights the need for methodological improvements and clearer regulatory
guidelines.
The process of correct recognition and reflection of long-term assets in financial statements
is closely related to a comprehensive study of their economic essence. In current national
accounting, assets are classified as property resources of an enterprise, but this definition has
been used mainly in relation to fixed capital.
In the conditions of a modern market economy, new types of accounting objects have also
entered the structure of long-term assets, the economic essence of which differs from traditional
fixed capital. For example, intangible assets, financial investments, long-term receivables and
deferred expenses - all of them participate in the activities of the enterprise for a long time.
In particular, intangible assets, although they do not participate directly in the production
process, bring economic benefits as an indirect factor in generating income. Also, long-term
financial investments and assets designated as investment property are also one of the directions
of effective investment of capital in the future.
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Figure 1. Classification of long-term assets by characteristics
All of the above aspects require a new methodological approach to reviewing the
classification and characteristics of long-term assets, their assessment and accounting.
The definition of long-term assets given in the regulatory legal acts of the Republic of
Uzbekistan, including the Law “On Accounting” and IFRS Standard No. 1 “Presentation of
Financial Statements”, in our opinion, cannot fully and accurately reflect the economic essence
of these assets. Therefore, we consider it appropriate to use the term “long-term” instead of the
word “main” in Articles 16-17 of the Law “On Accounting”.
It is also proposed to supplement paragraph 11 of IFRS Standard No. 1 with the following
definition:
“Long-term assets are assets that are acquired by an enterprise in the form of shares,
premiums or other forms and are intended for use for more than 12 months, have the ability to
generate future economic benefits and are under the control of the enterprise.”
The conducted studies show that the classification and description of long-term assets in
our country has not been sufficiently scientifically studied. Summarizing the opinions of various
experts, the formation of the correct classification and characteristics of these assets in the
process of accounting for long-term assets and analyzing the financial condition of the enterprise
based on financial statements is of great importance for consumers of financial information in
making the right management decisions.
In our opinion, the above views, on the one hand, serve to bring the composition of long-
term assets closer to the requirements of international financial reporting standards, and on the
Long-term (non-current) assets
According to their function
Fixed assets
Intangible assets
Construction in progress
Equipment under installation
According to the nature of the enterprise’s activities
Operational long-term assets
Investment long-term assets
Non-production long-term assets
According to ownership
Owned non-current assets
Leased non-current assets
According to the form of collateral in credit
Encumbered long-term assets
Unencumbered long-term assets
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other hand, help to correctly form a system of indicators when analyzing the activities of the
enterprise.
Professor G.V. Saviskaya states that long-term assets (fixed capital) are the means of an
enterprise aimed at long-term goals, including real estate, bonds, stocks, mineral reserves,
interests in joint ventures, intangible assets, etc.[19]
I.A. Zavalishina in her work “Modern Accounting” defines long-term assets as
follows:…“Long-term assets include the following assets:
1) with a useful life of more than one year;
2) used repeatedly in the activities of the enterprise;
3) not intended for sale.”…[7]
However, if the possibility of long-term assets generating future economic benefits is
questioned, then there is a possibility of their sale. Therefore, the description as “non-resaleable
assets” may sometimes be incorrect.
In the definition of economist V.V. Kovalev, long-term assets are assets used in the
activities of the enterprise for more than one year. However, this definition, in our opinion,
covers only the time criterion and does not sufficiently reflect other important aspects[9].
Discussion.
Based on the above analytical and theoretical considerations, it can be noted
that long-term assets are a strategic economic resource that ensures the long-term sustainable
development of an enterprise. Their correct classification, determination of their essence and
development of clear methodological approaches to their assessment are one of the pressing
issues of today.
The definition and classification of long-term assets in existing national legislation and
financial reporting standards is not sufficiently complete. In particular, such basic regulatory
documents as the Law "On Accounting" and IFRS No. 1 do not contain definitions that fully
cover the economic content of these assets. In this regard, it is considered necessary to make
amendments and additions to these regulatory documents.
An analysis of scientific sources shows that the definitions given by various experts,
although they reflect some of the characteristics of long-term assets, cannot fully cover them.
From this perspective, it is appropriate to define these assets as follows: Long-term assets are
economic resources acquired by an enterprise through a share, premium, or purchase, intended
for use for more than 12 months, capable of generating future economic benefits, and controlled
by the enterprise.
Such an approach, on the one hand, ensures convergence with international financial
reporting standards, and on the other hand, serves as a reliable basis for users of financial
information to properly analyze the financial condition of the enterprise and make management
decisions. Therefore, in-depth study of the theoretical, legal and practical aspects of long-term
assets and improvement of mechanisms for their correct accounting will serve to increase the
efficiency of the national accounting system in the future.
List of used literature:
1. Law of the Republic of Uzbekistan "On Accounting" dated 13.04. 2016 No. О'RQ-404.
2. Decree of the President of the Republic of Uzbekistan dated January 28, 2022 No. PF-60
"Development Strategy of New Uzbekistan".
3. IFRS (IAS) No. 1 "Presentation of Financial Statements"
4. Abdurasulov J. The role of economic analysis in making management decisions at
enterprises. Finance and Accounting, 2022. No. 2, 12–17.
5. Abdurasulov J. On the aspects of disclosure of income for basic use in the accounting policy
// "Taxpayer's Journals", 2000. No. 6. - p. 23-25.
6. Astanakulov O.T. Improving the methodology for analyzing the investment activities of
enterprises. Abstract of the dissertation for the degree of Doctor of Economics (Doctor of
Science). Tashkent 2020.B.-82
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7. Zavalishina, I.A. (). Modern accounting. Saint Petersburg. 2019.
8. Kudbiev D. Methodological principles of leasing fixed assets and their accounting. Journal
of Theoretical and Practical Research, 2023. 2(1), p. 57-62.
9. Kovalev, V.V. Financial analysis: Capital management. Moscow. 2018. Finance and
statistics.
10. Mavlyanova D.M. Improving the methodological aspects of accounting, analysis and audit
of current assets. Abstract of the dissertation for the degree of Doctor of Philosophy in
Economics. Tashkent 2020.B.-56
11. Makhmudova N.D. Improving the accounting and analysis of intellectual property objects in
business entities. . 08.00.08 – “Accounting, economic analysis and audit” Dissertation for
the degree of Doctor of Philosophy (PhD) in Economics. Tashkent 2025
12. Nazarov, K.K. Corporate Economics. Tashkent: “Economics” Publishing House 2020.
13. Nurmatov O.T. "Problems of organizing accounting for intangible assets in subsoil-using
enterprises". Finance and Banking. 2019 №1 63-69 p
14. Ochilov I.K. Financial accounting. Textbook - T., "Economics - Finance" 2007. 148 p.
15. Rizaev N.K. Methodology for organizing accounting and analysis of intellectual property
objects. 08.00.08 - "Accounting, economic analysis and audit" dissertation for the degree of
Doctor of Economic Sciences (Dsc). Tashkent 2019
16. Rakhimova G.M. Improving the methodology of accounting for fixed assets. Abstract of the
dissertation of the Doctor of Economic Sciences (Doctor of Science). Tashkent 2025.B.-82
17. Shakarov A.G., Organization of accounting and control of fixed assets (in various forms of
ownership), Tashkent Financial Institute. Abstract of the dissertation of the candidate of
economic sciences: 08.00.00. 2000.
18. Suyunov Yo.B. Improving accounting and auditing of financial investments in joint-stock
companies. Abstract of the dissertation for the degree of Doctor of Philosophy in Economics.
Tashkent 2022.B.-56
19. Savitskaya, G.V. Analysis of the economic activity of the enterprise. 2020
20. Tashnazarov S.N. Cost of goods and material reserves and issues of their reflection in
financial statements. Scientific electronic journal "Economics and innovative technologies".
2017. No. 6, November-December.
21. Hamidov, U. (). The economic importance of the effective use of long-term assets. Journal
of Economic Analy 22. Methodological Guide to International Financial Reporting
Standards (IFRS), Tashkent: 2023.
22. Ergashev, A.B. The Information Function of Accounting. Accounting and Auditing
Problems, 2019. No. 1, 27–31.
23. Abdullaev, R. Problems in the Evaluation and Accounting of Long-Term Assets. National
Economy, 2020. No. 3, 53–57
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