Definition
The accounting term used to describe an economic resource, which is owned by the corporation and expected to provide future benefits to its operation, is asset. Appearing on the balance sheet, assets are typically broken down into two categories:
Tangible Assets: have a physical form, such as a building, land, or a piece of machinery
Intangible Assets: usually involve a legal right or claim, such as a patent.
Calculation
Assets = Liabilities + Owner's Equity
Explanation
Assets are usually recorded on the balance sheet at their historical cost less accumulated depreciation. This is not necessarily the value at which the assets could be sold. The balance sheet will usually provide a subtotal for current assets, which are more liquid holdings that can be converted to cash in less than 12 months.
Related Terms
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.
Moneyzine EditorJanuary 8th, 2024
The financial accounting term current assets is generally defined as cash and other assets that can be converted into cash within one year or one operating cycle, whichever is longer. Current assets are a subcategory of assets, which appear on a company's balance sheet.Moneyzine EditorJanuary 12th, 2024- The financial accounting term tangible asset is used to describe assets that have physical substance. Examples of tangible assets include cash, accounts receivable, inventory, land, buildings / real estate, and machinery.Moneyzine EditorSeptember 21st, 2023
The financial accounting term intangible asset is used to describe those assets that lack physical structure (they cannot be seen or measured), and have a high degree of uncertainty surrounding future benefits to be derived from them. The most common types of intangible assets appearing on the balance sheet are goodwill, copyrights, trademarks, patents, franchises, and organization costs.Moneyzine EditorJanuary 22nd, 2024
