Asset
Asset — an economically valuable resource owned by a person or juridical entity as a result of formerly accomplished actions and acquired to provide a benefit. Assets are listed on the company’s balance sheet. The main role of an asset is to increase the prosperity of the owner and to ensure the owner’s financial stability. The owner can sell, buy or convert the asset to derive a benefit from the ownership.
The Assets are classified by several criteria
Physical existence — a possibility to be perceptible
- Tangible asset — an asset that physically exists and can be perceived. Examples: cash, building, land, equipment.
- Intangible asset — an asset that lacks physical existence that can’t be perceived. Examples: cryptocurrency, stocks, shares, indices.
Usage — a way to apply an Asset for achieving a task
- Operating asset — an asset used as a part of the daily operations to generate income. Examples: cash, instruments, transport, materials.
- Non-operating asset — an asset that doesn’t require being a part of daily operations, but it can generate income. Examples: tax loss carry-forwards, excess cash, vacant land, short-term investments
Convertibility — a possibility to be interchanged on another equivalent Asset
- Current asset — an asset that can be converted into cash or cash equivalent. Examples: cash, short-term deposit, inventory, marketable securities.
- Fixed asset — an asset that can’t be converted into cash or cash equivalent. Examples: building, equipment, land, patent.
