 |
| Image: Moneybespal.com |
An asset is a resource that is under the control of a person, a business, or another entity as a result of previous dealings or occurrences and from which it is anticipated that future financial gains will result. The ability of an asset to produce positive cash flows, to be sold, or to be used in another way to create positive economic value is what defines it.
A variety of assets fall into one of two basic categories: tangible assets or intangible assets. Physical resources that can be felt and observed, such as inventories, equipment, and real estate, are referred to as tangible assets. Patents, trademarks, and copyrights are examples of intangible resources.
Assets are often listed on a company's balance sheet and are divided into two categories: current assets and long-term assets. Cash, marketable securities, accounts receivable, and inventory is examples of resources that are projected to be used up or converted into cash within a year. Resources such as property, plant, and equipment, investments in other businesses, and intangible assets are examples of long-term assets because they are projected to produce financial benefits over a period longer than one year.
An asset's worth is defined by the present value of its anticipated future cash flows, taking into account the time value of money and the risk involved in those anticipated future cash flows. An asset's worth may fluctuate over time as a result of alterations in the market, advancements in technology, and other causes.
