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Published by mygurlz1991

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Published by: mygurlz1991 on Apr 16, 2011
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are economic resources. Anything tangible or intangible that iscapable of being owned or controlled to produce value and that is held to have positive economicvalue is considered an asset. Simply stated, assets represent ownership of value that can beconverted into cash (although cash itself is also considered an asset).
Thebalance sheet of a firm records the monetary
value of the assets owned by the firm. It is moneyand other valuables belonging to an individual or business.
Two major asset classes are tangibleassets and intangible assets. Tangible assets contain various subclasses, including current assetsand fixed assets.
 Current assets include inventory, while fixed assets include such itemsas buildingsandequipment.
Intangible assets are nonphysical resources and rights that have a value to the firm because they givethe firm some kind of advantage in the market place. Examples of intangible assetsaregoodwill, copyrights,trademarks, patentsandcomputer programs,
and financial assets,including such items asaccounts receivable,bondsandstocks.
is a resource controlled by the entity as a result of pastevents and from which future economic benefits are expected toflow to the entityAsset characteristicsIt should be noted that - other than software companies and the like -employees are not considered as assets, like machinery is, eventhough they are capable of producing value.
The probable present benefit involves a capacity, singly or incombination with other assets, in the case of profit orientedenterprises, to contribute directly or indirectly to future netcashflows, 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 thefinancial accountingsense of the term, it is not necessary to beable to legally enforce the asset's benefit for qualifying a resource asbeing an asset, provided the entity can control its use by other means.It is important to understand that in an accounting sense an asset isnot the same as ownership. Assets are equal to "equity" plus"liabilities."Theaccounting equationrelates assets,liabilities, andowner's equity: Assets = Liabilities +Stockholder's Equity (Owner's Equity)The accounting equation is the mathematical structure of thebalance sheet.Assets are listed on thebalance sheet. Similarly, ineconomicsan asset is any form in whichwealthcan be held.Probably the most accepted accounting definition of 
Thefollowing is a quotation from the IFRS Framework: "An asset is aresource controlled by the enterprise as a result of past eventsand from which future economic benefits are expected to flow tothe 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.
In acompany'sbalance sheetcertain divisions are requiredbygenerally accepted accounting principles(GAAP), which varyfrom country to country.
Current assets
Current assets are cash and other assets expected to beconverted to cash, sold, or consumed either in a year or in theoperating cycle (whichever is longer), without disturbing thenormal operations of a business. These assets are continuallyturned over in the course of a business during normal businessactivity. There are 5 major items included into current assets:
— it is the mostliquidasset, which includescurrency,deposit accounts, andnegotiable instruments(e.g., money orders, cheque,bank drafts).
— include securitiesbought and held for sale in the near future to generateincome on short-term price differences (trading securities).
— usually reported as net of allowancefor uncollectable accounts.
— trading these assets is a normalbusiness of a company. The inventory value reported onthebalance sheetis usually the historical cost or fair marketvalue, whichever is lower. This is known as the "lower of cost or market" rule.
— these are expenses paid incash and recorded as assets before they are used or consumed (a common example is insurance). Seealsoadjusting entries.The phrase
net current assets
(also called
) is oftenused and refers to the total of current assets less the total of currentliabilities.
Long-term investments
Often referred to simply as "investments". Long-term investmentsare to be held for many years and are not intended to be disposedof in the near future. This group usually consists of four types of investments:1.Investments in securities such as bonds, commonstock, or long-term notes.2.Investments in fixed assets not used in operations(e.g., land held for sale).3.Investments in special funds (e.g. sinking funds or pension funds).Different forms of insurancemay also be treated as long terminvestments.
Fixed assets

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