Assets

A benefit is something of financial worth that can be exchanged for currency. For example, the money in your holder, the money in your checking account, your car, and your home are all resources. These assets are tangible assets because they physically exist. All of a company's tangible assets, such as bank deposits, buildings, and inventory are included as possessions in the balance sheet. For an asset to come into view on the balance sheet, its value must be measurable. In the United States, GAAP requires that touchable assets become visible on the balance sheet at their cost to the company, known as the historical value, carrying value, or book value of the asset. This may give the wrong impression about readers of financial statements who mistakenly assume a firm's assets are recorded at true market price. Market price is the value or price at which buyers and sellers are willing to trade their assets. For example, take for granted you purchase a traditional for $10 and sell it for $200. The new customer of the traditional will place it on his or her balance sheet with a book value of $200, because that's what he or she paid for it.

Reduction is an expenditure subtracted from the book worth of an advantage to account for the decline in the value of the advantage to general wear and tear or obsolescence over a period of time. Thus the value of many tangible assets on a balance sheet is the book value less downgrading.  Land is the only corporeal asset that is not topic to reduction under GAAP.

Currency and cash equal are not topic to depreciation.  For example, although the money in your bank account does not "condense" over time, your car is subject to downgrading, as using it makes it worth less. In a corporate example, if a company purchases a factory for $50,000, it will originally appear on the balance sheet as a $50,000 benefit. At the end of the year, however, the value of the asset will be less, due to wear and tear. Thus the $50,000 asset may now appear on the balance sheet as being worth only $48,000 if the reduction of the asset is probable to be $2,000. Depreciation will be discussed in more elements later in this chapter.

There are also insubstantial assets.  These are resources with no substantial presence, such as corporate standing, brands, patents, trademarks, management expertise, and research. Elusive assets created within a company do not currently appear on the balance sheet in the United States because it is too difficult to determine their value truthfully. Thus if a company does investigate and gains a patent, the patent does not appear on the balance sheet. If a company purchases a patent from another organization, however, the value is known (the purchase price) and the copyright appears on the equilibrium as an asset called "goodwill." Goodwill is the amount the purchase price exceeds the value of the tangible assets purchased.