Business Asset
Candlefocus EditorBusiness assets are listed in the balance sheet at historical cost and organized in order of liquidity. Liquid assets are those that can be easily converted into cash, such as inventory and accounts receivables, whereas non-liquid assets such as buildings and vehicles cannot be easily converted into cash.
In the United States, most business assets can be written off and expensed or depreciated in the year of purchase under Section 179 of the Internal Revenue Code. The two types of business assets are current assets and non-current assets. Current assets are expected to be converted into cash within one year, such as inventories and short-term investments, whereas non-current assets may take longer, such as buildings and equipment.
Business assets can be further categorized according to their purpose: operating, financing or investing. Operating assets are used to generate income, financing assets are to help obtain funds, while investing assets are those owned to generate income and profit. Assets can also be categorized as either tangible or intangible. Tangible assets such as buildings, vehicles, and inventory are physical in nature, while intangible assets such as patents, copyrights and customer lists exist only in an abstract form.
The value of a business asset can be determined by a variety of methods, including historical cost, replacement cost, liquidation value, and current market value. An appraiser can assess the value of a business asset based on several factors such as current replacement cost, earning capacity, and market conditions.
Business assets are essential to any business and should be protected, managed and recorded regularly. They are an integral part of the overall financial picture of the company, and their value can be affected by a variety of external factors. Businesses should review their assets regularly to ensure their value is adequately reflected on the balance sheet and that assets are properly accounted for in the case of tax filings or business acquisitions.