Asset
From Economypedia.com
An asset is an economic term that denotes economic benefits that are gathered from a particular entity in future through transactions made in past. A fixed asset is a tangible and long term asset that is owned for purposes related to business. It is not supposed to be converted into cash in the upcoming or present financial year. Mostly, manufacturing equipments, furniture and real estate properties are regarded as fixed asset. [1]
A riskless asset is one that is expected to produce a certain amount of return in future. Riskless assets are also known as risk free assets. However, one important condition in case of riskless assets is that they are not adjusted against risks of inflation. [2]
Assets are generally classified into the following:
- Current assets
- Fixed assets
- Long-term investments
- Tangible assets
In terms of accounting, assets relate to liabilities and the owner's equity. This is elaborated through the following equation:
Assets = liabilities + owner's equity
Assets are characterized by three characteristics. Assets comprise of an innate capacity to yield future benefits in its own capacity or in combination with other assets. In profit oriented enterprises, assets yield a direct or indirect benefit to future net cash flows, while in non-profit enterprises, benefits are through services. Another characteristic of an asset is that business entity is in control of accessing benefits from it. The third characteristic of assets is the entity’s right to benefits derived from transactions that have occurred in the past.
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Asset pricing model
Asset pricing models are defined as a way of mapping financial worths of assets like bonds and stocks from the point of view of various types of conditions of world. As per asset pricing models prices of assets is endogenic, which means that they are influenced by conditions around them. [3]
Alternative assets
Alternative assets is an economic term that is used to refer to a non traditional asset that has a potential economic worth that would not be found in a conventional investment portfolio. It is normally hard to determine the value of alternative assets as they are not conventional. [4]
Intangible assets
Intangible assets are those properties that are not physical in nature. Following are certain examples of intangible assets in present day corporate world:
- Patents
- Business methods
- Trademarks
- Goodwills
- Copyrights
- Brand recognition
Intangible assets are normally divided into definite and indefinite. This classification is dependent on specific properties of particular assets. [5]
See also
- Asset performance
- Intermarket analysis
- Asset valuation
- Marquee asset
- Contingent asset
- Net liquid assets
- Current assets
- Tangible asset
References
- About.com entry on asset. Retrieved on Aug 18, 2008.
- Investorwords entry on fixed asset. Retrieved on Aug 18, 2008.
- Investorwords entry on riskless asset. Retrieved on Aug 18, 2008.
External links
- Articles on asset in Investopedia
Further reading
Article in networkmagazineindia
