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Assets in a business can be anything that is considered to be property or possessions owned by the business
Assets are divided into fixed or long term assets and current assets that are used up or will change quite quickly in the course of doing business
Fixed Assets generally have a lifetime of at least 3 years, may be divided into the following groups (these are recognised by Her Majesty's Revenue & Customs as being suitable groupings for tax purposes)
Land & Buildings – generally valued by an assessment of current market value. Where property is leased there will be an asset value in any improvements that are made to the property
Intellectual Property – known also as Intangible Assets is a recently introduced terminology to include patents and trade marks. Again a value would be assessed by consideration of its cost and worth to the enterprise
Plant & Equipment - those items used specifically for the production of products intended for sale. These are valued from their initial cost with a reducing (depreciating) value based on their age
Office Equipment - equipment used for administration purposes, excluding Computers. These are valued from their initial cost with a reducing (depreciating) value over 3 or, at most 5 years
Computers and Software - computing machines and associated software that is initially bought as part of those machines. They are valued from their initial cost with a reducing (depreciating) value over 3 years
Furniture and Fittings - items that are used as furniture in the business and any permanent fittings necessary for the business. These are valued from their initial cost with a reducing (depreciating) value over 3 or, at most 5 years
Vehicles - all vehicles that are used exclusively for the business. These are valued from their initial cost with a reducing (depreciating) value over 3 or, at most 5 years
Current Assets sometimes known as Liquid Assets are those that can be turned into cash quite quickly. They are generally listed as
Inventory (or stock in trade) - those parts and materials that are awaiting to be made up into saleable product as well as those products awaiting sale. These are valued at cost or the current saleable value whichever is least
Cash - includes all cash immediately available such as that in bank accounts and petty cash
Receivables - the cash that is due to be received from Customers for business done previously not yet paid for
Pre-Payments - the amount of any pre-paid items that are not due to be charged immediately
Because an investment will have been made in the equipment and inventory these assets are sometimes known as Capital. However this can be misleading in the way in which the balance sheet is presented so it is recommended that the above items are treated simply as Assets and all investments treated as Equity
In some cases assets may be held for sale, as in the case of a car supplier when the cars in stock are current assets and should be treated as inventory and not as fixed assets
Comments and suggestions for improving this site are appreciated and should be addressed to administration
Last Update 28-Feb-2010
Date first published 07-Nov-2005
