Assets, assets and assets. The term is certainly familiar in your ears. Indeed, modern human life cannot be separated from the so-called assets, especially those who work in a company.
However, are you sure your understanding of assets is right? Because the term is still widely identified by ordinary people as something that is only owned by the company. Of course misconceptions about the definition of assets can lead to inaccuracies in valuing things.
Understanding misleading terms can also make a person difficult to classify which assets are included and which are not. Not to mention that not all assets can be called assets because they do not have their characteristics.
Understanding misleading terms can also make a person difficult to classify which assets are included and which are not. Not to mention that not all assets can be called assets because they do not have their characteristics.
To avoid this, understanding what an asset is needs to be done by company owners and individuals. The following is an explanation of the definitions, characteristics, types, and life cycle or assets that are important to understand.
However, are you sure your understanding of assets is right? Because the term is still widely identified by ordinary people as something that is only owned by the company. Of course misconceptions about the definition of assets can lead to inaccuracies in valuing things.
Understanding misleading terms can also make a person difficult to classify which assets are included and which are not. Not to mention that not all assets can be called assets because they do not have their characteristics.
Understanding misleading terms can also make a person difficult to classify which assets are included and which are not. Not to mention that not all assets can be called assets because they do not have their characteristics.
To avoid this, understanding what an asset is needs to be done by company owners and individuals. The following is an explanation of the definitions, characteristics, types, and life cycle or assets that are important to understand.
Definition of Assets in General
Assets are goods or anything that has economic, commercial or exchange value. These three values are commonly known as economic value, commercial value, and exchange value.
Other definitions of assets are all assets owned by companies or individuals. In this case, what is meant by wealth is resources in the form of objects or power of attorney. Wealth is obtained through an event in the past that is expected to provide a benefit in the future.
Having assets certainly provides many benefits for someone, especially a company. The benefits can be obtained directly or indirectly. In the corporate realm, assets have a productive nature and are also classified as part of the company's operations.
On the other hand, assets can also play a role in reducing cash expenditure. The potential benefits of owning assets in the future are providing a variety of things that are productive or productive. An example is giving cash or something of similar value or cash equivalent.
Assets can also provide benefits in the form of producers of goods and services. Assets can also be used as a medium of exchange to get other assets to pay off an obligation or debt. So, owning assets is important for companies and individuals alike.
Explanation of Experts
In addition to the general explanation of the assets above, many experts also have their own definitions of the meaning of the term. Here are some notions of assets based on the explanation of experts.
Munawir explained that an asset is a facility and resource that has economic value. By owning assets, the company is able to support the acquisition cost of the asset or its fair value needs to be measured.
Meanwhile, according to Hidayat, what is meant by assets is goods which based on legal understanding are known as objects. The object can be anything that moves or does not move, tangible or tangible or intangible or intangible.
Finally, the 2011 Revised edition of the BUMN Accounting Guidelines explains that assets are owned and controlled by an entity as a result of past events. Assets have economic benefits which are expected to provide benefits for the company in the future.
Asset Characteristics
After understanding the meaning, it needs to be understood if something can be called an asset if it has several characteristics. Basically, there are 3 characteristics that make a difference something can be called an asset:
- Having Economic Benefits: The first characteristic is that assets always have economic benefits and are obtained later in the future.
- In accordance with Everything Mastered: The second characteristic is that assets are in accordance with everything that is controlled or controlled by the company or someone.
- Results of Previous Transactions: Finally, the characteristics of assets are the results of previous transactions and events.
Types of Common Assets Owned
Assets can still be classified into several types according to their class. Generally, assets can be divided into 3 different types, namely:
1. Current Asset
What is meant by current assets is assets that are used and are useful in a relatively short period of time. Usually, the use of current assets does not exceed one financial year. Current assets are also liquid or can be converted into cash in no more than one year.
Because the cycle is relatively fast, current assets that were previously owned will disappear automatically quickly. Then, current assets will be replaced with other new assets.
Examples of current assets are cash, short-term investments, accounts receivable, and also inventories. Other examples include, notes receivable, accrued receivables or income to be obtained, prepaid expenses, and so on.
2. Fixed Asset
As a second type, fixed assets are assets in the form of price or resource wealth owned by a business entity. This type of asset has permanent properties and can be measured clearly. The difference with current assets is that fixed assets can be used and utilized for a long period of time.
Generally, the use of this type of assets can be more than one year. The purpose of the company to have these fixed assets is to be used alone and not for sale. However, this does not mean that assets of this type cannot be sold or converted to other forms of assets.
Under certain conditions or reasons, a company may decide to sell its fixed assets. So, even though it is not liquid, fixed assets can still be sold by the company to achieve a certain goal. Examples of fixed assets are land, buildings, office equipment, vehicles, machinery, long-term investment, and so on.
3. Intangible Asset
The last type commonly owned by companies are intangible assets. As the name implies, assets of this type cannot be seen, held, or stored. However, the benefits of owning this asset can be felt significantly by the company even though it has no physical form.
Intangible assets can be in the form of company rights where ownership is regulated and also protected by statutory regulations. Examples of the types of intangible assets belonging to companies include patents, rental rights, building rights, contractual rights, trademarks, franchises, goodwill, and many more.
Asset Life Cycle
In addition to the above, assets also have various phases in the life cycle. Typically, the life cycle of an asset is divided into 4 phases, namely the planning phase, the procurement phase, the operation and maintenance phase, and the phase of removal or disposal.
For the first phase or planning, the company identifies needs. An example is whether there is demand or urgency for ownership of an asset or not.
Next to the second phase, the procurement phase, the company already has the assets that it wants to have. There are 3 ways a company can do to get an asset, the first is through the production process or building itself. The second way is to acquire assets by buying, and the third way is to exchange assets or get them through external donations.
Then enter the third phase, the company can utilize these assets in accordance with the objectives set in the previous phase. In this phase the company will optimize the use of assets to avoid procuring other or new assets. In addition, the company will also usually evaluate other assets owned to determine whether there is a performance that is less than the maximum or make cash flow ineffective.
In this third phase the company will also make updates, changes, and repairs of assets owned. These activities can be carried out routinely or when assets are damaged.
Finally, the fourth phase or write-off will begin when the economic life of an asset has started to run out. This phase can also be done when the needs of services provided by assets are no longer needed by the company.
The Importance of the Role of Assets in a Company
Assets have an important role for a company in operational terms. Depending on the type and purpose, assets can provide benefits for the company to run well as needed. Although obtained in the past, assets can still provide various benefits to the company in the future.
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