Asset

An asset is a resource controlled by an entity as a result of past events from which future economic benefits are expected to flow to the entity. In financial reporting, an asset is recognized when it is probable that the benefits will flow to the entity and the asset’s cost or value can be measured reliably. Assets are typically categorized by their physical form and by their expected time horizon.

Physical or tangible assets include cash, inventory, equipment, land and buildings. Intangible assets include non-physical resources such as patents, trademarks, software, licenses and goodwill. Assets are also categorized as current—expected to be used, sold, or converted to cash within one year or the entity’s operating cycle—and non-current (long-term).

Measurement and lifecycle: assets are initially recognized at cost. Subsequent measurement varies by category and accounting framework. Most tangible and intangible assets are depreciated or amortized over their finite useful lives, while indefinite-lived intangibles may be tested for impairment instead. Impairment occurs when the asset’s carrying amount exceeds its recoverable amount. Some assets are carried at fair value under specific models or revaluation approaches.

Financial assets include cash, receivables, investments in debt or equity instruments, and contractual rights to receive cash or other benefits. These are subject to specialized measurement and impairment rules. Asset management, a field within accounting and finance, focuses on optimizing the acquisition, use, maintenance, and disposal of assets to maximize value and minimize cost and risk.