This article is about the business definition. For other uses see Asset (disambiguation). It has been suggested that Asset (economics) be merged into this article or section. (Discuss) Proposed since November 2009. Accountancy Key concepts Accountant  Accounting period  Bookkeeping  Cash and accrual basis  Cash flow management  Chart of accounts  Constant Purchasing Power Accounting  Cost of goods sold  Credit terms  Debits and credits  Double-entry system  Fair value accounting  FIFO & LIFO  GAAP / IFRS  General ledger  Historical cost  Matching principle  Revenue recognition  Trial balance Fields of accounting Cost  Financial  Forensic  Fund  Management  Mergers and Acquisitions  Tax Financial statements Statement of Financial Position  Statement of cash flows  Statement of changes in equity  Statement of comprehensive income  Notes  MD&A  XBRL Auditing Auditor's report  Financial audit  GAAS / ISA  Internal audit  SarbanesOxley Act Accounting qualifications CA  CPA  CCA  CGA  CMA This box: view talk

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).1

The balance sheet of a firm records the monetary2 value of the assets owned by the firm. It is money and other valuables belonging to an individual or business.1 Two major asset classes are tangible assets and intangible assets. Tangible assets contain various subclasses including current assets and fixed assets.3 Current assets include inventory while fixed assets include such items as buildings and equipment.4

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 programs4 and financial assets including such items as accounts receivable bonds and stocks. Contents 1 Formal definition 2 Asset characteristics 2.1 Current assets 2.2 Long-term investments 2.3 Fixed assets 2.4 Intangible assets 2.5 Tangible assets 3 Other related meanings 3.1 Information asset 4 References Formal definition An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity5(Framework Par 49). Asset characteristics

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. The probable present benefit involves a capacity singly or in combination with other assets in the case of profit oriented enterprises to contribute directly or indirectly to future net cash flows and in the case of not-for-profit organizations to provide services; The entity can control access to the benefit; The transaction or event giving rise to the entity's right to or control of the benefit has already occurred.

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: Assets Liabilities +Stockholder's Equity (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 .6 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."7 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.8 Current assets Main article: Current asset 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: Cash and cash equivalents it is the most liquid asset which includes currency deposit accounts and negotiable instruments (e.g. money orders cheque bank drafts). Short-term investments include securities bought and held for sale in the near future to generate income on short-term price differences (trading securities). Receivables usually reported as net of allowance for uncollectable accounts. Inventory trading these assets is a normal business of a company. The inventory value reported on the balance sheet is usually the historical cost or fair market value whichever is lower. This is known as the "lower of cost or market" rule. Prepaid expenses these are expenses paid in cash and recorded as assets before they are used or consumed (a common example is insurance). See also adjusting entries. 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. Long-term investments 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: Investments in securities such as bonds common stock or long-term notes. Investments in fixed assets not used in operations (e.g. land held for sale). Investments in special funds (e.g. sinking funds or pension funds). Different forms of insurance may also be treated as long term investments. Fixed assets Main article: Fixed asset 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 Main article: Intangible asset Intangible assets lack of 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 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. Other related meanings Information asset Main article: asset (computer security) 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 an asset or a group of assets the value tied to the largest sum between the related asset and their value should be considered.9 10 References a b Sullivan Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River New Jersey 07458: Pearson Prentice Hall. pp. 272. ISBN 0-13-063085-3.  J. G. Siegel N. Dauber & J. K. Shim "The Vest Pocket CPA" Wiley 2005. 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. J. Downes J.E. Goodman "Dictionary of Finance & Investment Terms" Baron's Financial Guides 2003 a b J. Downes J.E. Goodman "Dictionary of Finance & Investment Terms" Baron's Financial Guides 2003; and J. G. Siegel N. Dauber & J. K. Shim "The Vest Pocket CPA" Wiley 2005. IFRS for SMEs. 1st Floor 30 Cannon Street London EC4M 6XH United Kingdom: IASB (International Accounting Standards Board). 2009. pp. 14. ISBN 978-0-409048-13-1.  The International Accounting Standards Board IASB IASB.org IFRS Intermediate Accounting--Kieso et. al "An Introduction to Factor Analysis of Information Risk (FAIR)" Risk Management Insight LLC November 2006; Technical Standard Risk Taxonomy ISBN 1-931624-77-1 Document Number: C081 Published by The Open Group January 2009.