My understanding of "nonperforming assets", any asset that you
have accumulated that cannot be used in your business.
For example: If I am the franchise owner of McDonald's, my deep
fryer that I use to make the fries would be considered an asset. It
is an asset that I use in my business. The building itself is also
a performing asset. So those would be examples of performing
assets.
Non-performing example: I am the franchise owner of McDonald's
and I purchase a piece of property to block another restaurant from
being in a location that possibly would negatively affect my
business. This purchase has a purpose, but is not performing within
my business. Possibly another example would be if I purchase a
Corvette (Car or boat) for my own use, but purchased it through my
business, that also would be a non-performing asset.
Related Q&A：
What is a non-performing asset？Well, let me tell you, a non-performing asset is basically something that's giving financial institutions a real headache. You see, it's an asset, like a loan or a debt, that isn't generating the income it's supposed to. Like, if you loan someone money and they're not making the payments on time or at all, that loan becomes a non-performing asset. It's a big deal because it can really hurt the balance sheet of a bank or other lender. Oh, and it often requires special handling and efforts to try and recover that money. So, that's what a non-performing asset is, in a nutshell!
