List of Assets in Accounting
Asset consists of the resources which are owned or which are controlled by Corporation, individual or the government as the result of the events of the past with the motive of generating the cash flows in the future.
Here is a list of various types of asset that a person can own or control like operating assets, non-operating assets, current assets, non-current assets, physical assets, and intangible assets.
#1 – Cash and Cash Equivalents
The first in this list of assets is the cash and cash equivalents. Every business requires cash or bank balance for its operations. With the cash and cash equivalents, one can buy land, buildings, merchandise etc., and can pay for the expenses like employees salaries, utility bills etc.
When the inflows are from the loan then it increases the liabilities of the company, if from the sale of assets then it decreases the assets and if the inflows are from the profit then it grows the equity value of the shareholders of the company thereby increasing the interest of the investors in the company. If there is a lack of sufficient funds in the business then the company has to sell off its assets which will lead to the risk of becoming bankrupt or discontinuation of the operations.
Example: The Inflow of cash to the company is in the form of loans, raising share capital, issue of debentures, profits from the business operation, gain on sale of property or equipment etc.
#2 – Short Term Investments
Short Term Investments contains those investment assets lists which are short term in nature and are liquid investments. These can be in debt or equity markets and have short term maturity of less than 1 year.
#3 – Inventory
Inventory is a term used for the goods which are available for sale in the business. The revenue of the business totally depends upon the sale of its inventory. Higher the sale, Higher is the revenue generates and vice versa. Inventories are not the long term asset list. They are part of current assets lists. In manufacturing concern, inventories are further classified as
- Raw materials: They are unprocessed materials on which the work is yet to be started. For example, to manufacture a t-shirt, a cloth is a raw material.
- Work-in-progress: When the work on raw material is done partially and some value addition is still remaining. For example, if the cloth is semi-stitched and still the other side of the t-shirt is yet to be stitched. Then such semi stitched piece is part of Work in progress.
- Finished goods: The products which are ready for sale as they have completed production. The final product t-shirt which is properly stitched is the finished good.
#4 – Accounts and Notes Receivables
It is a very common thing in the business enterprise to make sales on credit. Due to such sales made on credit, the asset named account receivable or trade receivable is created in the current assets list. Accounts receivable represents the money owed to the business enterprise by their debtors.
For example, ABC Company sold goods worth $5,000 to XYZ Company. Now XYZ Company is liable to pay $5,000 to ABC Company. So in the books of ABC Company, XYZ Company is the debtor of $5,000 which is a part of accounts receivable. If the debtors fail to pay the amount then the amount is written off as bad debts.
Accounts receivable also include bills receivable which direct the debtors to pay off the amount mentioned within the time specified on the bill. In the above example, if the bill of exchange is issued to XYZ Company, directing him to pay $5,000 within 60 days then instead of reporting XYZ Company as debtors, ABC Company will report $5,000 as bills receivable.
#5 – Prepaid Expenses
Another asset included in the list is the Prepaid expenses. Prepaid expenses are paid in advance before they are accrued or when the benefit of such payment will be received in the coming financial years. The unexpired portion of the prepaid expense is reported on the asset side of the balance sheet.
source: Google SEC filings
We note from above that Google’s Prepaid revenue share, expenses and other assets have increased from $3,412 million in December 2014 to $37,20 million in March 2015.
#6 – Land
The land is the tangible long-term asset which the business holds generally for the period of greater than one year. Land it bought for or with the place of business like office, plant etc, or for the housing and the commercial developments.
The land is shown at the purchase price by the company until the same is sold. Any change in value during the holding period is not recorded and only the gain or loss at the time of sale of land is reflected as the increase or decrease in cash or equity account. The balance sheet shows the purchase price until it is sold. There is no wear and tear in a land so no depreciation benefit of same is allowed as per the income tax.
#7 -Property, Plant & Equipment
Properties, Plant & Equipment are the tangible assets which are physical in nature. They are part of the company’s list of fixed assets because they are used for long term period. These assets are reported in the balance sheet at cost less the amount of depreciation. The capital intensive industries are having a more significant amount of fixed assets such as manufacturers, oil companies, automobile companies etc.
The example of Plant & machinery is Machinery, office furniture, Motor Vehicles etc.
#8 – Intangible Assets
source: Google SEC Filings
Intangible assets are those assets which cannot be touched or we can say they are not physical in nature. Valuation of these assets is generally difficult because they are unique and are not readily available for sale. These assets carry their own importance. For instance, the brand name promotes sales. If one buys a franchise of KFC then surely we will have a good base of the consumer. But if one opens his own business with a new brand name when creating a consumer base will definitely take a lot of time.
The list of intangible assets are goodwill, trademark, copyrights, patent, brand names etc.
#9 – Goodwill
Goodwill is recorded on the balance sheet when one company buys another company and pays a premium over the fair market value of the assets.
source: Amazon SEC Filings
#10 – Long Term Investments
Long Term Investment assets list include those investments in debt or equity which the company intends to hold for a long term basis.
source: Alphabet SEC Filings
Alphabet’s non-current asset example of long-term investments includes non-marketable investments of $5,183 million and 5,878 million in 2015 and 2016, respectively.
This has been a guide to the list of Assets in Accounting. Here we discuss the list of Top 10 types of assets including cash & cash equivalents, prepaid expense, inventory, receivables, PPE, Goodwill, intangible assets, long term investments etc. You can learn more about accounting with the following articles –