In financial accounting, an asset is any resource owned or controlled by a business or an economic entity.
Intangible assets include goodwill, intellectual property (such as copyrights, trademarks, patents, computer programs),[4] and financial assets, including financial investments, bonds, and companies' shares.
IFRS (International Financial Reporting Standards), the most widely used financial reporting system, defines: "An asset is a present economic resource controlled by the entity as a result of past events.
"[6] The definition under US GAAP (Generally Accepted Accounting Principles used in the United States of America): "An asset is a present right of an entity to an economic benefit.
This accounting definition of assets includes items that are not owned by an enterprise, for example a leased building (Finance lease), but excludes employees because, while they have the capacity to generate economic benefits, an employer cannot control an employee.
[9] In the financial accounting sense of the term, it is not necessary to have title (a legally enforceable ownership right) to an asset.
The essential characteristic of control is the ability to benefit from the asset and prevent other entities from doing likewise.
Also referred to as PP&E (property, plant and equipment), these are purchased for continued and long-term use to earn profit in a business.
This group includes land, buildings, machinery, furniture, tools, IT equipment (e.g., laptops), and certain wasting resources (e.g., timberland and minerals).
They are written off against profits over their anticipated life by charging depreciation expenses (with exception of land assets).
They include patents, copyrights, franchises & licenses, goodwill, trademarks, trade names, etc.
This could include vehicles and machinery, and in financial markets, options contracts that continually lose time value after purchase.
[16] An asset classified as wasting may be treated differently for tax and other purposes than one that does not lose value; this may be accounted for by applying depreciation.