Control of an economic resource – This is all about: A present economic resource controlled by the entity as a result of past events.
Two very simple examples to start with:
Pat Co has purchased a patent for $20,000. The patent gives the company sole use of a particular manufacturing process which will save $3,000 a year for the next five years.
This is an asset, albeit an intangible one. There is a past event, control and future economic benefit (through cost savings).
Baldwin Co (the company) paid Don Brennan $10,000 to set up a car repair shop, on condition that priority treatment is given to cars from the company’s fleet.
This cannot be classified as an asset. Baldwin Co