Assets as an element of financial statements – Definition: An asset is a present economic resource controlled by the entity as a result of past events. Assets as an element of financial statements
An economic resource is a right that has the potential to produce economic benefits. Assets as an element of financial statements
Tangible assets are those that can be touched. Examples include: Assets as an element of financial statements
– Buildings, – Cash on deposit, – Cash on hand, – Certificates of deposit or CDs, – Commercial paper, – Corporate bonds, – Corporate stock, – Debentures held, – Equipment, – Federal agency securities, – Federal treasury notes, – Guaranteed investment accounts, – Inventory, – Land, – Loans to members of insurance trusts systems, – Loans receivables,
– Marketable equity securities, – Marketable securities, – Money market funds, – Mortgages (receivable) held directly, – Mutual funds, – Notes receivables, – Repurchase agreements, – “Restricted” cash and investments, – Savings accounts, – Share of funds in governmental investment accounts or pools, – State and local government securities, – Time deposits and – Warrants (to purchase securities). Assets as an element of financial statements
Intangible assets are non-physical, meaning they cannot be touched. They have value because they represent an advantage to a business or organization. Examples include:
Accounts receivable, Blueprints, Bonds, Brand names, Brand recognition, Broadcast licenses, Buy-sell agreements, Chemical formulas, Computer programs, Computerized databases, Contracts, Cooperative agreements, Copyrights, Customer relationships, Designs & drawings, Distribution rights, Development rights, Distribution networks,
Domain names, Drilling rights, Easements, Engineering drawings, Environmental rights, FCC licenses, Film libraries, Food flavorings & recipes, Franchise agreements, Goodwill, Historical documents, Joint ventures, Laboratory notebooks, Landing rights, Licenses, Loan portfolios, Location value, Management contracts, Manual databases,
Manuscripts, Medical charts and records, Methodologies, Mineral rights, Musical compositions, Natural resources, Patents, Permits, Procedural manuals, Product designs, Property use rights, Proprietary technology, Royalty agreements, Schematics & diagrams, Securities portfolios, Security interests, Shareholder agreements, Solicitation rights, Supplier contracts, Technology sharing agreements, Title plants, Trademarks, Trade secrets, Trained & assembled workforce, Training manuals, Use rights – air, water, land.
This section discusses three aspects of these definitions:
What Is an Asset?
An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company’s balance sheet and are bought or created to increase a firm’s value or benefit the firm’s operations.
An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it’s manufacturing equipment or a patent.
An asset represents an economic resource for a company or represents access that other individuals or firms do not have. A right or other access is legally enforceable, which means economic resources can be used at a company’s discretion, and its use can be precluded or limited by an owner.
For an asset to be present, a company must possess a right to it as of the date of the financial statements. An economic resource is something that is scarce and has the ability to produce economic benefit by generating cash inflows or decreasing cash outflows.
Financial assets represent investments in the assets and securities of other institutions. Financial assets include stocks, sovereign and corporate bonds, preferred equity, and other hybrid securities. Financial assets are valued depending on how the investment is categorized and the motive behind it.
Intangible assets are economic resources that have no physical presence. They include patents, trademarks, copyrights, and goodwill. Accounting for intangible assets differs depending on the type of asset, and they can be either amortized or tested for impairment each year.
Assets as an element of financial statements
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