Small non-profits tend to be careful with money. If your organisation buys something useful, you probably expect to keep using it for as long as possible.
That can make the word asset a bit confusing.
A desk might last more than 12 months. So might a stapler, a hole punch, a microwave, or that bulk pack of toilet paper someone got on special. But that does not mean every useful thing your organisation owns needs to be listed as an asset in your annual reporting.
This guide explains what an asset is, when something is significant enough to record, and how small charities and incorporated societies can think about assets without making year-end harder than it needs to be.
In accounting terms, an asset is something your organisation owns or controls that it expects to use or benefit from in the future.
For small non-profits, a practical way to think about it is:
An asset is something your organisation expects to keep and use for more than 12 months to help bring in money or achieve your purpose.
For example, a van may be an asset because your organisation uses it to reach the people you serve. Shares may be an asset because they hold value and may return dividends to your organisation.
The key idea is that an asset is not just something you bought. It is something that continues to have value for your organisation beyond the current year.
Common assets for non-profit organisations can include:
Not every organisation will have assets like these. Many small charities and societies may only have a few, or none at all.
That is okay.
The point is not to create a long list of everything your organisation owns. The point is to give readers of your financial statements a fair and useful picture of the significant things your organisation holds.
Cash in the bank is also an asset in the broad accounting sense. But in Tier 4 reporting, your bank balances and term deposits are generally shown in the cash/bank section of your performance report, rather than listed again as “other significant assets”. XRB’s Tier 4 template includes term deposits alongside bank accounts and cash balances.
So, if your organisation has a term deposit, you would usually treat it as part of your cash and bank balances for Tier 4 reporting.
That is different from something like shares, which are usually held as an investment and may need to be listed as a significant asset.
This is where common sense matters.
Your organisation might buy plenty of things that last more than 12 months:
Technically, some of these things might be useful for more than a year. But listing every small item as an asset would usually make your financial statements harder to read, not easier.
It would also create a lot of unnecessary admin.
Imagine trying to estimate the value of every stapler, hole punch, chair, mug and storage box your organisation owns. The result might look detailed, but it probably would not give a more accurate or useful picture of your organisation.
This is where the idea of significance matters.
For small organisations, a useful rule of thumb is to focus on assets that are large enough to matter.
In New Zealand, Inland Revenue’s low-value asset threshold is commonly used as a practical guide. Assets costing $1,000 or less can generally be treated as low-value assets for tax depreciation purposes, while more expensive assets are usually depreciated over time.
For Good Numbers users, this means a simple starting point is:
If the asset or group of assets cost more than $1,000 and will be used for more than 12 months, it may be a significant asset.
This does not mean every organisation needs to get technical or complicated. It just gives you a practical line to help decide what should be recorded separately at year end.
There are two common ways a purchase might meet the $1,000 threshold.
For example, your organisation buys a laptop from PB Tech for $2,000.
That laptop is likely to be a significant asset. It does not matter whether you paid for it in one transaction or across several smaller payments. What matters is the total cost of the item.
So, if the laptop costs $2,000, you would treat the laptop as a $2,000 asset.
Now imagine your organisation buys six laptops at $500 each, all at the same time.
Individually, each laptop is under $1,000. But together, the purchase is $3,000. Because they were bought together as a set of similar items, it makes sense to treat the group as a significant asset.
So, the six laptops would be recorded together as a $3,000 asset.
But if you later bought one more $500 laptop on its own, that seventh laptop would not usually need to be recorded as a significant asset. You could simply record it as a normal payment, unless your organisation chooses to treat it as an asset for consistency.
The goal is to make your financial statements clear and useful.
If your significant assets section includes a vehicle, a share portfolio, and a major set of equipment, readers can quickly understand what your organisation holds.
But if the same section includes every stapler, chair, cable, mug and small appliance, the picture becomes cluttered. It may even make your organisation look like it has more meaningful assets than it really does.
Good reporting is not about listing everything. It is about showing the things that matter.
In the Good Numbers app, most everyday purchases should be coded to the normal payment category that best describes what they were for.
For example:
This helps keep your year-end reporting clean.
Small purchases stay in your regular payment categories. Significant assets are recorded as Other Payment categories so they match the significant assets listed in your annual performance report.
Usually, no.
Depreciation is an accounting method used to spread the cost of an asset over its useful life. For example, if a computer is expected to be used for three years, an organisation using accrual accounting might spread the cost across those three years.
That matters for larger organisations using accrual accounting because it helps avoid one large asset purchase making a single year look unusually good or bad.
But Tier 4 reporting is cash-based. That means the report focuses on cash received and cash paid. Depreciation is not a cash transaction, so it is not included in Tier 4 cash-based performance reporting. XRB explains that Tier 4 entities report transactions on a cash basis, while non-cash items like depreciation are part of accrual-style reporting. (XRB)
Instead, Tier 4 organisations generally provide information about significant assets they hold at year end.
So, for this guide, the main thing to know is:
You do not need to calculate depreciation for Tier 4 reporting, but you do need to think about whether your organisation has significant assets to disclose, and what you estimate they are valued at.
We will cover depreciation properly in a separate guide.
When your organisation buys something, ask four questions:
If the answer is no to all of these, you probably do not need to worry about it.
An asset is something your organisation owns or controls and expects to use or benefit from in the future.
For small non-profits, the most useful focus is on significant assets: things like vehicles, major equipment, investments, or groups of items that are large enough to matter.
You do not need to list every stapler, chair or mug. In fact, doing that could make your financial statements harder to understand.
Keep it simple: record the things that matter, treat everyday small purchases as normal payments, and make sure your year-end report gives a clear picture of what your organisation owns.
This guide provides general information only and is not accounting, tax, legal or financial advice. The right approach may depend on your organisation’s circumstances, reporting tier, rules, and the types of assets you hold.
If you are unsure how to treat a particular asset, check the relevant XRB reporting requirements, speak with your accountant or reviewer, or contact Inland Revenue where tax treatment is involved.
Ask Duncan anything — big or small. He’ll get back to you ASAP, and your questions will help improve the information here for everyone.
