What is a Business Asset?

A business asset is an item of value owned by a company. Business assets span many categories.
They can be physical, tangible goods, such as vehicles, real estate, computers, office furniture, and
other fixtures, or intangible items, such as intellectual property.

Special Considerations

Current Assets Vs. Non-Current Assets

Business assets are divided into two sections on the balance sheet: current assets and non-current
assets. Current assets are business assets that will be turned into cash within one year, such as cash,
marketable securities, inventory and receivables, debts owed to a company by its customers for
goods or services that have been delivered or used but not yet paid for. These assets may only have
value for a short while, but they are still treated as business assets.

Non-current assets, or long-term assets, on the other hand, are less liquid assets that are expected
to provide value for more than one year. In other words, the company does not intend on selling or
otherwise converting these assets in the current year. Non-current assets are generally referred to
as capitalized assets since the cost is capitalized and expensed over the life of the asset in a process
called depreciation. This includes items such as property, buildings, and equipment.

Depreciation and Amortization of Business Assets

Tangible or physical business assets are depreciated, while intangible business assets are amortized,
the process of spreading the cost of an intangible asset over the course of its useful life. When
businesses amortize and depreciate expenses, they help tie an asset's costs to the revenues it
generates. 

Depreciation is calculated by subtracting the asset's salvage value or resale value from its original
cost. The difference between the cost of the asset and salvage value is divided by the useful life of
the asset. If a truck has a useful life of 10 years, costs $100,000, and has a salvage value of $10,000,
the depreciation expense is calculated as $100,000 minus $10,000 divided by 10, or $9,000 per year.
In other words, instead of writing off the entire amount of the asset, capitalized business assets are
only expensed by a fraction of the full cost each year.

Valuing Business Assets

The value of business assets vary and can change over time. Many current, tangible assets, such as
vehicles, computers and machinery equipment tend to age and some may even become obsolete as
newer, more efficient technologies are introduced.

When companies want to use an asset as collateral or to substantiate depreciation deductions they
can get them valued by an appraiser.