Even a person who does not do business and does not own the fundamentals of the economy has heard the term “asset” more than once. This word is most often used when it is necessary to estimate the value of a business and is often considered a factor affecting the final price. In addition, the assets are and people who own shares in joint stock companies. Everyone knows that too. In this article we will try to understand in more detail what a net asset is, what types it is, and so on.
The definition of
An asset is a property that belongs to an organization engaged in economic activities, or an individual. In the aggregate of assets, you can include those materials and resources that are needed for the organization of production (or any other business activity). The difference between assets and other resources is that they are acquired for the purpose of further profit. Thus, in each asset potentially pledged income that can be obtained in the future, after the implementation of certain operations. It turns out that an asset is a tool that can make a profit.
To make it clearer, we give this example. A business entity makes envelopes out of paper and ribbons. In this situation, paper and tape as a material will be assets that will transfer their value to the price of finished products (envelopes) and thus bring profit.
Types of assets
In economic theory, there are several types of assets. The classification is carried out according to different criteria: the nature, degree of participation in the turnover, the period of existence and return.
For example, depending on the nature of the asset - it is a bank deposit, real estate (commercial use), securities, shares in a company, property that participates in economic activities, etc.
If we distinguish assets by their return period, we can distinguish short-term and long-term assets.
Speaking about the participation in the turnover, it is possible to distinguish between current and non-current assets. The latter classification, by the way, is one of the most popular, so we will focus attention on it.
Negotiable and non-current assets
So, any asset can be classified by this criterion. It is quite simple if you know what the essence of business activity is. In the example described above, where the company is engaged in the creation of envelopes, paper and tape are current assets, since they are cut and included in the circulation of goods in the form of envelopes. Non-negotiable can be called those funds that do not become a commodity, that is, do not fall into circulation. For example, this is a machine that wraps paper.
Characteristics of the turnover of assets allows you to determine how they will be used in the future: they are immediately transformed into finished products or used in such a way that these resources are not changed, therefore their resale will be possible in the future. The risk that business owners will be exposed to primarily depends on this.
Who can hold assets?
Who can own an enterprise asset? This is a rather simple question - the enterprise itself. After all, on its balance sheet is such property as furniture, equipment, buildings and other objects.
If we talk about other types of assets, such as deposits or securities, then everyone can own them. For example, you, as an individual, have the opportunity at any time to purchase shares of an enterprise, then to participate in its management and receive dividends. The same applies to other types: deposits, property, and so on.
Why do we need assets?
The main purpose of the assets is to participate in the organization of the production process. Since every asset of an enterprise is some kind of equipment, office space or even licenses and certificates, their function is to work on the process in general, to be embodied in the goods and services produced by the enterprise. A secondary function of the asset, which determines its importance, is to generate income. With proper management and planning of business assets will begin to move into products that should cost more than their initial value.
In addition to the types of assets discussed above, there is another category that should be mentioned. This is a concept such as an intangible asset. This is a slightly different resource with an individual character. So, it is noteworthy that it does not have the structure of material things, exists in conjunction with some kind of documented documentation and, therefore, cannot be transferred (or simply not reissued due to inexpediency) to other subjects.
Under current conditions, we can safely say that every organization or private entrepreneur, like any company, has a resource such as an intangible asset. This is explained by the fact that this category includes a whole list of abstract values: reputation, licenses, documentation with permissions to conduct activities, databases, intellectual property.
Such assets cannot be felt with your hands, you can see with your own eyes, and sometimes you cannot even fully appreciate it. This is a kind of abstraction, which at the same time is quite valuable. The clearest example is the reputation of a business entity in a business market. It is impossible to determine its value, but every entrepreneur will agree that very much depends on its quality, including future profits.