Classifying assets by intended use and holding period

Steps:

• Define non-current assets as tangible items held for long-term use in business operations, not for resale (e.g., property, plant, equipment).
• Examine item 1: Breakdown truck recovers vehicles, serving ongoing operations, so non-current.
• Examine items 2 and 3: New and used cars in showroom are held for sale to customers, classifying as inventory (current assets).
• Examine item 4: Loaned service cars support short-term customer needs during repairs, treated as current assets like stock or receivables.

Why B is correct:

• Only the breakdown truck qualifies as a non-current asset under IAS 16, as it is used durably in operations beyond one year.

Why the others are wrong:

• A includes 2 and 3, which are current inventory for sale.
• C includes 4, a short-term loan asset, not long-term.
• D includes 2 and 4, both current assets.

Final answer: B