An asset is a resource which has an economic value which can generate future cash flows. It is owned or controlled by individuals, corporation or a government. Asset can be a property, inventory, trademarks or patents.
Based on its liquidity, assets are recorded in the balance sheet in descending order. More the asset is liquid takes more time to convert into cash.
Classification of assets
The assets are classified as follows −
The examples of assets as per convertibility are as follows −
Currents assets − Cash, cash equivalents, short term deposits, stock, office supplies, marketable securities etc.
Non- current assets − Land, building, equipment, machinery, patents, trademarks etc.
The examples of assets as per physical existence are as follows −
Tangible assets − Land, building, machinery, cash, office supplies, stock, equipment, marketable securities etc.
Intangible assets − Goodwill, patents, brand, permits, copyrights etc.
The examples of assets as per usage are as follows −
Operating assets − Cash, stock, building, equipment, goodwill, patents, copyrights, machinery etc.
Non – operating assets − Short term investments, marketable securities, vacant land, interest from fixed deposits etc.