![]() ![]() An asset may be recognized as long as the reporting entity controls the rights (economic resource) the asset represents. In the financial accounting sense of the term, it is not necessary to have title (a legally enforceable ownership right) to an asset. There is a growing analytical interest in assets and asset forms in other social sciences too, especially in terms of how a variety of things (e.g., personality, personal data, ecosystems, etc.) can be turned into an asset. In economics, an Asset (economics) is any form in which wealth can be held. ![]() This accounting definition of assets includes items that are not owned by an enterprise, for example a leased building ( Finance lease), but excludes employees because, while they have the capacity to generate economic benefits, an employer cannot control an employee. A present right of anĮntity to an economic benefit entitles the entity to the economic benefit and the ability to restrict others' access to the benefit to which the entity is entitled. The definition under US GAAP (Generally Accepted Accounting Principles used in the United States of America): "An asset is a present right of an entity to an economic benefit." Characteristics ĬON 8.4 provides the following discussion of the nature of an asset:Į17: An asset has the following two essential characteristics:Į18:The combination of those two characteristics allows an entity to obtain the economic benefit and control others' access to the benefit. Īn economic resource is a right that has the potential to produce economic benefits." IFRS (International Financial Reporting Standards), the most widely used financial reporting system, defines: "An asset is a present economic resource controlled by the entity as a result of past events. Intangible assets include goodwill, copyrights, trademarks, patents, computer programs, and financial assets, including financial investments, bonds, and companies' shares. Intangible assets are non-physical resources and rights that have a value to the firm because they give the firm an advantage in the marketplace. Current assets include cash, inventory, accounts receivable, while fixed assets include land, buildings and equipment. Tangible assets contain various subclasses, including current assets and fixed assets. Īssets can be grouped into two major classes: tangible assets and intangible assets. It covers money and other valuables belonging to an individual or to a business. The balance sheet of a firm records the monetary value of the assets owned by that firm. Assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset). It is anything (tangible or intangible) that can be used to produce positive economic value. In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. ![]()
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