Asset

An Asset is a resource owned or controlled by an individual, organization, or entity that is expected to provide future economic benefits.

• Context:
  • It can (typically) be classified into Tangible Assets and Intangible Assets, depending on whether the asset has a physical presence.
  • It can (often) appear on a company’s Balance Sheet, where assets are listed as part of the organization’s total wealth.
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  • It can range from being a Current Asset to a Non-Current Asset, depending on its liquidity and the time frame within which it is expected to be converted into cash.
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  • It can be acquired through purchase, inheritance, or other means and contribute to the owner’s financial position.
  • It can generate income, such as through Rental Income from property or Dividends from stocks.
  • It can be used as collateral in Financial Transactions, allowing the owner to secure loans or other forms of credit.
  • It can appreciate or depreciate in value over time, depending on factors like market conditions, usage, and obsolescence.
  • It can be a subject of Valuation, where its worth is assessed for financial reporting, taxation, or investment purposes.
  • It can be involved in Asset Management activities, where its value and usage are optimized to achieve financial or operational goals.
  • It can be transferred, sold, or leased, depending on the owner's needs and strategy.
  • It can be protected by Insurance, mitigating the risk of loss or damage.
  • It can be categorized based on its function, such as Operating Assets (used in day-to-day operations) and Investment Assets (held for generating income or appreciation).
  • It can be influenced by Market Conditions, Legal Regulations, and Economic Policies that affect its value and usability.
  • It can play a crucial role in determining an entity's Net Worth, which is the total value of assets minus liabilities.
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• Example(s):
  • Tangible Assets, such as:
    • Real Estate: Land and buildings owned by an individual or organization, providing space for operations or investment potential.
    • Machinery: Equipment used in manufacturing or production processes, contributing to the output and efficiency of a business.
    • Inventory: Goods held for sale or production, representing stock that can be converted into cash.
    • Vehicles: Transportation assets like cars, trucks, or ships, used for business or personal purposes.
    • Natural Resources: Raw materials like oil, minerals, or timber, which can be extracted and sold.
  • Intangible Assets, such as:
    • Intellectual Property: Non-physical assets like patents, trademarks, and copyrights, which provide legal rights and exclusivity.
    • Goodwill: The excess value of a business beyond its tangible assets, often linked to brand reputation and customer loyalty.
    • Computer Software: Proprietary software systems that support business operations, though lacking physical form.
    • Franchises: Rights granted to operate a business using the branding, processes, and intellectual property of another company.
    • Licenses: Permissions granted to use certain technologies, software, or other intellectual property.
    • Business Ideas: Innovative concepts that, while intangible, hold the potential for economic value if developed and commercialized.
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  • Economic Assets, such as:
    • Financial Assets, such as:
      • Stocks: Shares in a corporation, representing partial ownership and a claim on part of the corporation's assets and earnings.
      • Bonds: Debt instruments issued by governments or corporations, promising to repay borrowed money with interest.
      • Bank Accounts: Deposits held in financial institutions, providing liquidity and earning interest.
      • Mutual Funds: Pooled investment vehicles that collect funds from multiple investors to invest in a diversified portfolio.
      • Cryptocurrencies: Digital or virtual currencies that use cryptography for security and operate independently of a central bank.
    • an (owned) Economic Resource.
    • an (owned) Building.
    • a Capital Equipment.
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• Counter-Example(s):
  • Liability: An obligation or debt owed by an individual or organization, which represents a future outflow of resources rather than an economic benefit.
  • Expense: Costs incurred in the process of generating revenue, which do not provide future economic benefits.
  • Consumable Goods: Items like food, fuel, or office supplies, which are used up quickly and do not provide lasting economic value.
  • Service: Intangible activities or benefits provided in exchange for payment, which do not result in ownership of a tangible or intangible asset.
• See: Liability, Equity, Balance Sheet, Valuation, Asset Management, Physical Asset, Digital Asset, Legal Property, Economic Asset, Financial Accountancy, Economic Value, Ownership, Cash, Balance Sheet, Fair Market Value, Tangible Property, Intangible Assets, Inventory, Buildings, Capital Equipment.

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References

2015

• (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/asset Retrieved:2015-4-9.
  • In financial accounting, an asset is an economic resource. 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 value of ownership 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.

2014

• http://www.investopedia.com/terms/a/asset.asp
  1. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.
  2. A balance sheet item representing what a firm owns.

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