Asset

Assets fill one side of a balance sheet, usually listed in the order they turn into cash. Current assets are the ones expected to convert within a year: cash, money customers owe, inventory. Non-current assets are the long-lived ones, such as buildings, machinery, software and patents.

Three tests decide whether something belongs there at all. The company has to control it, the benefit has to lie in the future rather than having already been consumed, and the amount has to be measurable. Control is the test that keeps a well-trained sales team off the page while the delivery van it drives sits on it: staff can resign on a month's notice, so no company controls them the way it controls a vehicle.

Most assets are carried at what was paid for them, less the depreciation charged since, which is their book value rather than their market value. How long that cost stands depends on the rulebook. Under United States accounting rules it stands until the asset is sold or written down, so a warehouse bought thirty years ago can sit on the books at a fraction of what it would fetch today; international standards let a company revalue property and equipment upward instead, so the same building can be carried at very different amounts in two countries. A brand built in-house carries nothing at all under either system, while the same brand bought from a rival would appear in full. The common mistake is reading the asset column as a list of resale prices. It is a record of what was spent and what has been written off since.