Characteristics of Assets

Characteristics of Assets

1.    Controlled Resource

Asset is resource controlled by the organization. For example plant, machinery, cash Asset is control by the entity. Control is a concept associated with risk reward. An asset is said to be controlled by entity, if organization is responsible for risks and reward of asset associated with asset.

2.    Future Benefit

It is expected the benefit flow from the asset. It means that asset must have capacity to produce or generate economic benefit for the organization. An asset, which does not have that capacity, cannot be treated as asset; rather it is expense of the organization.

3.    Present asset

Asset is controlled by the organization now. There is no concept of future asset.  There are only present asset arising from the past.

4.    Acquired & Gifted

Assets are normally created by acquisition (purchase) or gift. A government may gift land to some investor to invest at under develop area.

5.    Types of assets

Assets can be categorized using different criteria i.e. tangibility, function, timing,

Tangibility – Tangible and non tangibly asset

Timing – current and non current assets

Function – plant, machinery, vehicles

6.    Tangible & non Tangible asset

Assets which can be touched are known as tangible asset. Examples of tangible asset plant, machinery. While that asset which cannot be touched is known as intangible asset, examples of intangible asset goodwill, patents

7.    Current & Non Current Asset

Asset which has less than one year useful life is regarded as current asset, while asset has more than one year’s life is regarded as non current asset.