Assets
Definition
Asset is an item generally appearing on the business Balance Sheet. It represents an economic value that can be used by the business to produce revenue and earn a profit.
What It Means
Business assets are valuable possessions that are used in business activities to produce revenues and profits. Typical assets appearing on the Balance Sheet are:
- Cash and short term investments
- Accounts receivable
- Inventory
- Equipment and machinery
- Business real estate
In addition, a number of important business assets may not appear on the company’s balance sheet:
- Intangible assets, such as internally developed intellectual property
- Business goodwill
Similar to the calculation of business value, there are three ways to determine the value of a business asset:
- Cost approach
- Market approach
- Income approach