what is an asset 
an asset is a resource with economic value that an individual a company or a country owns or controls with the expectation that it will provide a future benefit investopedia nez riazunderstanding assetsindividuals usually think of assets as items of value that they could convert into cash at some future point and that might also be producing income or appreciating in value in the meantime those can be financial assets like stocks bonds and mutual funds or physical assets like a home or an art collection in the case of businesses an asset may be something that has the potential to generate cash flow reduce expenses or improve sales regardless of whether it s a tangible asset like manufacturing equipment or a fleet of trucks or an intangible asset like a patent or a trademark for something to be counted as one of its assets a company must possess a right to it as of the date of the company s financial statements types of assetsin corporate accounting assets are reported on a company s balance sheet and can be broadly categorized into current or short term assets fixed assets financial assets and intangible assets current assets are short term economic resources that are expected to be converted into cash or consumed within one year current assets can include cash and cash equivalents accounts receivable physical inventory and various prepaid expenses while cash is easy to value accountants must periodically reassess the recoverability of inventory and accounts receivable if there is evidence that a receivable might be uncollectible it will be classified as impaired or if inventory becomes obsolete companies may have to write off those assets some assets are recorded on companies balance sheets using the concept of historical cost it represents the original cost of the asset when purchased by the company and can also include expenses such as delivery and set up incurred to incorporate an asset into the company s operations fixed assets are resources with an expected life of greater than a year such as plants equipment and buildings an accounting adjustment called depreciation is made for fixed assets as they age it allocates the cost of the asset over time depreciation may or may not reflect the fixed asset s loss of earning power generally accepted accounting principles gaap allow depreciation under several methods the straight line method assumes that a fixed asset loses its value in proportion to its useful life while the accelerated method assumes that the asset loses its value faster in its first years of use 1