A company that produces drugs is preparing a balance sheet. Which of the following would be most likely to be considered a long-term asset on this balance sheet?
A) commercial paper held by the company
B) the inventory of chemicals used to produce the drugs made by the company
C) a patent for a drug held by the company
D) the cash reserves of the company

Question

Quizplus · Accepted Answer

A patent for a drug is an intangible long-term asset because it provides exclusive rights to the company for a specified period of time. Commercial paper and cash reserves are more easily convertible to cash and would be considered current assets. The inventory of chemicals used to produce drugs would also be a current asset since it is a product in process of being made.

A Company That Produces Drugs Is Preparing a Balance Sheet