Assets

Any item with measurable value.

In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset). The balance sheet of a firm records the monetary value of the assets owned by the firm. It is money and other valuables belonging to an individual or business.

Two major asset classes are tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, while fixed assets include such items as buildings and equipment. Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the market place. Examples of intangible assets are goodwill, copyrights, trademarks, patents and computer programs, and financial assets, including such items as accounts receivable, bonds and stocks.

It should be noted that - other than software companies and the like - employees are not considered as assets, like machinery is, even though they are capable of producing value. In the financial accounting sense of the term, it is not necessary to be able to legally enforce the asset's benefit for qualifying a resource as being an asset, provided the entity can control its use by other means. It is important to understand that in an accounting sense an asset is not the same as ownership. Assets are equal to "equity" plus "liabilities. "The accounting equation relates assets, liabilities, and owner's equity:The accounting equation is the mathematical structure of the balance sheet. Assets are listed on the balance sheet. Similarly, in economics an asset is any form in which wealth can be held. Probably the most accepted accounting definition of asset is the one used by the International Accounting Standards Board .

The following is a quotation from the IFRS Framework: "An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise. "Assets are formally controlled and managed within larger organizations via the use of asset tracking tools.

These monitor the purchasing, upgrading, servicing, licensing, disposal etc. , of both physical and non-physical assets. [clarification needed] In a company's balance sheet certain divisions are required by generally accepted accounting principles (GAAP), which vary from country to country. Current assets are cash and other assets expected to be converted to cash, sold, or consumed either in a year or in the operating cycle (whichever is longer), without disturbing the normal operations of a business. These assets are continually turned over in the course of a business during normal business activity.

There are 5 major items included into current assets:The phrase net current assets (also called working capital) is often used and refers to the total of current assets less the total of current liabilities. Often referred to simply as "investments". Long-term investments are to be held for many years and are not intended to be disposed of in the near future. This group usually consists of four types of investments:Different forms of insurance may also be treated as long term investments.

Also referred to as PPE (property, plant, and equipment), these are purchased for continued and long-term use in earning profit in a business. This group includes as an asset land, buildings, machinery, furniture, tools, and certain wasting resources e. g. , timberland and minerals. They are written off against profits over their anticipated life by charging depreciation expenses (with exception of land assets).

Accumulated depreciation is shown in the face of the balance sheet or in the notes. These are also called capital assets in management accounting. Intangible assets lack physical substance and usually are very hard to evaluate. They include patents, copyrights, franchises, goodwill, trademarks, trade names, etc. These assets are (according to US GAAP) amortized to expense over 5 to 40 years with the exception of goodwill.

Websites are treated differently in different countries and may fall under either tangible or intangible assets. Tangible assets are those that have a physical substance and can be touched, such as currencies, buildings, real estate, vehicles, inventories, equipment, and precious metals. In Information technology, chiefly in Information security, data needed to conduct the organization business and the technical equipment to manage (input, store, display, print) are called information asset. They can represent a large portion of intangible and tangible asset of an organization. If these assets become unavailable, business operations can be disrupted.

Confidential information disclosure can represent a huge liability. While evaluating the potential loss tied to and asset or a group of asset, the value tied to the largest sum between the related asset and their value should be considered.

There are different methods of assessing the monetary value of the assets recorded on the Balance Sheet. In some cases, the Historical Cost is used; such that the value of the asset when it was bought in the past is used as the monetary value. In other instances, the present fair market value of the asset is used to determine the value shown on the balance sheet.