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asset

noun
as·​set | \ ˈa-ˌset also -sət How to pronounce asset (audio) \

Definition of asset

1 assets plural

a : the property of a deceased person subject by law to the payment of his or her debts and legacies
b : the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts
2 : advantage, resource His wit is his chief asset.
3a : an item of value owned
b assets plural : the items on a balance sheet showing the book value of property owned
4 : something useful in an effort to foil or defeat an enemy: such as
a : a piece of military equipment
b : spy
Synonyms More Example Sentences Learn More about asset

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Examples of asset in a Sentence

The state's natural assets include mountains and beautiful lakes. rumors persisted that CIA assets were behind the coup d'état

Recent Examples on the Web

 Now is a good time to focus on increasing your assets and working toward a more secure future. — Tribune Content Agency, oregonlive, "Horoscope for Sept. 12, 2019: Happy birthday Emmy Rossum; Pisces, meditate to improve your mood," 12 Sep. 2019 Exxon has for months indicated its interest in selling those assets. — Jordan Blum, Houston Chronicle, "Exxon Mobil reportedly selling Norwegian North Sea assets for $4B," 6 Sep. 2019 China’s smaller banks have been especially aggressive, increasing their assets by 144% over the past five years, compared with 53% for large banks. — The Economist, "After three Chinese banks are bailed out, how many more are at risk?," 5 Sep. 2019 Swire is cleaning house atop its most high-profile asset to avoid falling further afoul of Beijing. — BostonGlobe.com, "Carbonite putting together new leadership team in the absence of a CEO," 5 Sep. 2019 Randy Phillips has stepped away from his position as CEO of LiveStyle and is working for the company's investors as a consultant as LiveStyle prepares to sell more of its assets, Billboard has learned. — Dave Brooks, Billboard, "Randy Phillips Steps Down as CEO of LiveStyle, Shifts Focus to Managing Boy Band Why Don't We: Exclusive," 5 Sep. 2019 Arrested on fraud charges, Khodorkovsky was subjected to a series of show trials and shipped off to a Siberian prison for a decade, his assets seized and sold back via shadow companies to the state. — David Rooney, The Hollywood Reporter, "'Citizen K': Film Review | Venice 2019," 31 Aug. 2019 Those assets would be liberated to be put to highest and best use — a massive increase in productivity nationwide. — Grover Norquist, Twin Cities, "Grover Norquist: Indexing capital gains helps more than the rich," 29 Aug. 2019 In contrast, a Chapter 11 reorganization allows a debtor to sell some or all of its assets or propose a reorganization plan that aims to resolve and satisfy enough creditors to re-emerge as a going concern. — Lindsey Simon, The Conversation, "Why companies file for bankruptcy – and how it protects both debtors and creditors," 29 Aug. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'asset.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of asset

circa 1523, in the meaning defined at sense 1

History and Etymology for asset

back-formation from assets, singular, sufficient property to pay debts and legacies, from Anglo-French assetz, from asez enough, from Vulgar Latin *ad satis, from Latin ad to + satis enough — more at at, sad

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More Definitions for asset

asset

noun

Financial Definition of asset

What It Is

An asset is an economic resource that a) can be owned, and b) is expected to provide future economic benefits.

How It Works

A company lists its assets on its balance sheet. Common asset categories include cash and cash equivalents; accounts receivable; inventory; prepaid expenses; and property and equipment. Although physical assets commonly come to mind when one thinks of assets, not all assets are tangible. Trademarks and patents are examples of intangible assets.

[InvestingAnswers Feature: Ten Things You Need to Know About Every Balance Sheet]

Assets are presented on the balance sheet in order of their liquidity. Current assets, which are expected to be consumed or converted to cash within one year, are listed at the top. Cash, short-term investments and inventory are examples of current assets.

Long-term assets, or fixed assets, are expected to be consumed or converted to cash after one year's time, and they are listed on the balance sheet beneath current assets. Property (such as office space or buildings) and equipment are common long-term assets.

Investors buy assets with the understanding that assets should hold, or even better, grow their economic value over time. Common asset classes for individual investors include stocks, bonds, cash, foreign currencies, collectibles, precious metals, real estate and commodities. A collection of assets is called a "portfolio," and it is widely believed that an individual's portfolio should include assets from several different categories, a process called "asset allocation."

Why It Matters

Assets create or preserve wealth, making them of utmost importance to both individuals and companies.

Financial analysts are encouraged to carefully study a company’s financial statements, including the balance sheet. By using the practice of ratio analysis, an analyst can determine how good a company is at using its assets to generate wealth for shareholders. Read on to learn how to use the following ratios:

Return on Assets (ROA) & Return on Net Assets (RONA) -- measures of how much profit is generated by a company's assets.

Current Ratio, Quick Ratio, & Acid-Test Ratio -- measures of a company's ability to meet short term obligations.

[InvestingAnswers Feature: Financial Statement Analysis for Beginners -- The Balance Sheet]

Source: Investing Answers

capital asset

noun

Financial Definition of capital asset

What It Is

For firms, a capital asset is an asset that has a useful life longer than one year and is not intended for sale during the normal course of business.

For individuals, capital asset typically refers to anything the individual owns for personal or investment purposes. This excludes property held for sale in the normal course of business, money received or about to be received from the sale of that property, depreciable personal property used for business (such as rental property), protected creative works (such as copyrights on a book), and government publications purchased or received for free from the government.

How It Works

Capital assets usually include buildings, land, and major equipment. For example, Company XYZ might own a factory building on three acres of land, and the factory might be full of expensive equipment. The building, the land, and the equipment are all usually considered capital assets. Construction in progress, trademarks, patents, copyrights, vehicles, intellectual property, and art can also count.

Capital assets are recorded on the balance sheet at their historical cost, less any accumulated depreciation (or amortization in the case of intangible assets). So if Company XYZ paid $100,000 for a piece of equipment in the factory, it would record it as a $100,000 asset on its balance sheet.

But as the asset ages and becomes worth less, Company XYZ would increase the amount of accumulated depreciation associated with the equipment, so that the equipment's net book value reflects its reduced value.

Why It Matters

Companies have some leeway in deciding what to count as a capital asset. A $10 stapler, for example, has a useful life of more than one year, but because it is of such little monetary value, it is often administratively easier to expense the stapler (that is, to reflect its cost as an expense on the income statement) than to have the accounting staff set up a depreciation schedule for the stapler. Thus, many companies create written capital asset policies that dictate what assets must be capitalized and include a minimum threshold of purchase price.

It is also important to note that the Financial Accounting Standards Board (FASB) and the IRS both have some influence over the limits of the useful lives of capital assets. They do this to prevent companies from assigning their capital assets extremely long useful lives in order to record tiny depreciation expenses (and thus inflate profits).

Source: Investing Answers

fixed asset

noun

Financial Definition of fixed asset

What It Is

A fixed asset is anything that has commercial or exchange value, generates revenue, has a life longer than one year and has a physical form.

How It Works

Let’s assume XYZ Company intends to purchase an office building for $10 million. The building has a physical form, will last longer than a year and generates revenue, making it a fixed asset. When the company executes a legal purchase agreement with the seller, XYZ Company will have a place from which to conduct its business operations, and it will control what happens to the building from that point forward. Thus, XYZ Company acquired a $10 million asset and should reflect this fixed asset on its balance sheet.

According to the Financial Accounting Standards Board, all assets must provide reasonably estimable future economic benefits, must be controlled by the owner and must be the result of a prior event or transaction (such as a purchase).

Companies often record fixed assets on their balance sheets as property, plant and equipment. Like most assets, fixed assets usually lose value as they age, that is, they depreciate (amortization is the term used when referring to intangible assets). The rate at which a company chooses to depreciate its assets may result in a book value that differs from the current market value of the assets.

Why It Matters

Although fixed assets commonly come to mind when one thinks of assets, not all assets are fixed. Trademarks, patents and goodwill are examples of intangible assets.

Regardless of their physical form, however, information about a company’s assets is a key component of accurate financial reporting, business valuation and thorough financial analysis. Although the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies define how and when a company’s assets are reported, companies may employ a variety of accepted methods for recording, depreciating and disposing of assets, which is why analysts must also carefully study the notes to a company’s financial statements.

For more detail about how the Financial Accounting Standards Board defines and governs accounting for assets, {ia_ext|go here|http://www.fasb.org/pdf/con6.pdf}.

Source: Investing Answers

intangible asset

noun

Financial Definition of intangible asset

What It Is

An intangible ass

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