Other assets are generally uncommon or insignificant class of assets that holds a certain value. They are used by the company and generate return too by giving the benefit to the company. They are also highly liquid like the assets and the cash conversion cycle for these are less than a year.
What is an example of an asset?
Examples of these intangible assets are:
- Brand names
- Broadcast licenses
- Copyrights
- Domain names
- Easements
- Film libraries
- Franchise agreements
- Goodwill
- Landing rights
- Licenses
What are considered assets?
Types of assets
- Current assets (short-term) Current assets are made up of the items a business consumes within the period of one year.
- Non-current assets (long-term) Long-term assets continue to provide revenue for a business over the course of many years. ...
- Investment assets. ...
What are the properties of an asset?
What are the properties of financial assets?
- Moneyness. The moneyness of the financial assets implies that they are easily convertible to cash within a defined time and determinable value.
- Divisibility & Denomination.
- Reversibility.
- Cash.
- Maturity Period.
- Convertibility.
- Currency.
- Liquidity.
What are non current assets?
What is a Noncurrent Asset? A company's long-term investments for which full value will not be realised within the accounting year is known as noncurrent assets. Intellectual property, plant, equipment, physical property, and investment in other companies are a few examples of noncurrent assets. They are recorded in the company's balance sheet.
What are examples of other assets?
Examples of assets include:Cash and cash equivalents.Accounts Receivable.Inventory.Investments.PPE (Property, Plant, and Equipment)Vehicles.Furniture.Patents (intangible asset)
Is Other assets a current asset?
Other current assets is a default classification of "current asset" general ledger accounts. It does not include cash, marketable securities, accounts receivable, inventory, and prepaid expenses.
What is other assets and liabilities?
Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. In short, assets put money in your pocket, and liabilities take money out!
What are 5 examples of assets?
Examples of AssetsCash and cash equivalents.Accounts receivable (AR)Marketable securities.Trademarks.Patents.Product designs.Distribution rights.Buildings.More items...•
What falls under other current assets?
Examples of other current assets (OCA) include: Advances paid to employees or suppliers. A piece of property that is being readied for sale. Restricted cash or investments. Cash surrender value of life insurance policies.
How do you calculate other assets?
The simple calculation for OCA would be by subtracting from current assets the current asset accounts as cash & cash equivalents, accounts receivable, marketable securities, inventory, and prepaid expenses.
Is a car an asset?
Even with all that in mind, a car is an asset because you can quickly put it on the market and convert it to cash, albeit for less than what you paid. That alone makes it an asset by definition. It's those added costs and the constant decline in value that make a car a depreciating asset.
Is a house an asset?
A house, like any other object that comes into your possession, is classified as an asset. An asset is something you own. A house has a value. Whether you assign the value as the price at which you purchased the house or the price at which you believe you can sell the house, that amount is how much your house is worth.
Is a house a liability or asset?
At a very basic level, an asset is something that provides future economic benefit, while a liability is an obligation. Using this framework, a house could be viewed as an asset, but a mortgage would definitely be a liability. Most people who own a home have a mortgage but also have equity built up in that home.
Which is not an asset?
Resources owned by a company (such as cash, accounts receivable, vehicles) are referred to as the Assets of a company but the loan which is taken is not an asset.
What is your strongest asset?
The 20 Strongest Assets You Can Bring to a CompanyFlexibility. ... Innovative thinking. ... Networking skills. ... Attention-to-detail skills. ... Punctuality. ... Self-motivation. ... Positive attitude. ... Professional ethics.More items...•
Is money an asset?
Personal assets are things of present or future value owned by an individual or household. Common examples of personal assets include: Cash and cash equivalents, certificates of deposit, checking, and savings accounts, money market accounts, physical cash, Treasury bills.
What is other assets on balance sheet?
What are Other Assets? Other assets is a grouping of accounts that is listed as a separate line item in the assets section of the balance sheet. This line item contains minor assets that do not naturally fit into any of the main asset categories, such as current assets or fixed assets.
What is the difference between current assets and other assets?
Current assets are a company's short-term assets; those that can be liquidated quickly and used for a company's immediate needs. Noncurrent assets are long-term and have a useful life of more than a year. Examples of current assets include cash, marketable securities, inventory, and accounts receivable.
What is considered a current asset?
Assets whose value is recorded in the Current Assets account are considered current assets. Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets. Current Assets may also be called Current Accounts.
Is other receivables a current asset?
Other receivables generally come with the headings “Trade receivables and others” in the financial statement of large listed public companies. Other receivables are disclosed under the heading “Current Assets” on the balance sheet of the company at the end of the period.
What are some examples of current assets?
Examples of current assets include cash and cash equivalents (CCE), marketable securities, accounts receivable, inventory, and prepaid expenses.
What Are Other Current Assets (OCA)?
They are referred to as “other” because they are uncommon or insignificant, unlike typical current asset items such as cash, securities, accounts receivable, inventory , and prepaid expenses .
Why is the net balance in OCA account typically quite small?
Because these assets are recorded rarely, or are insignificant, the net balance in the OCA account is typically quite small.
What is OCA in financial terms?
Thus, the value of a company's other current assets (OCA) may vary greatly from year to year, depending on the health of the company and how it spends its money. It is useful to determine how material these assets are, as they may distort a firm's liquidity. If the funds in OCA grow to a material amount, it may include one or more assets ...
What are some examples of OCA?
Examples of other current assets (OCA) include: Advances paid to employees or suppliers. A piece of property that is being readied for sale. Restricted cash or investments.
What is OCA account?
The OCA account is listed on the balance sheet and is a component of a firm's total assets.
When are other current assets (OCA) discussed?
When other current assets (OCA) are discussed, information will be provided in the footnotes to the financial statements. Explanations may be necessary, for example, when there is a notable change in other current assets (OCA) from one period to the next. Other current assets (OCA) are expected to be disposed within a year or to mature ...
What is an asset?
Personal Assets. Business Assets. An asset is anything of value or a resource of value that can be converted into cash. Individuals, companies, and governments own assets. For a company, an asset might generate revenue, or a company might benefit in some way from owning or using the asset.
What are assets in a company?
For companies, assets are things of value that sustain production and growth. For a business, assets can include machines, property, raw materials and inventory—as well as intangibles such as patents, royalties, and other intellectual property.
What are assets in the future?
An asset can often generate cash flows in the future, such as a piece of machinery, a financial security, or a patent. Personal assets may include a house, car, investments, artwork, or home goods. For corporations, assets are listed on the balance sheet and netted against liabilities and equity. 1:12.
What is the difference between current assets and non-current assets?
The two key differences with business assets are non-current assets (like fixed assets) cannot be converted readily to cash to meet short-term operational expenses or investments. Conversely, current assets are expected to be liquidated within one fiscal year or one operating cycle.
What is the difference between land and business assets?
The two key differences with business assets are non-current assets (like fixed assets) cannot be converted readily to cash to meet short-term operational expenses or investments. Conversely, current assets are expected to be liquidated within one fiscal year or one operating cycle.
What are current assets?
Current assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. Examples of current assets include: Cash and cash equivalents : Treasury bills, certificates of deposit, and cash.
What is balance sheet?
The balance sheet lists a company's assets and shows how those assets are financed, whether through debt or through issuing equity. The balance sheet provides a snapshot of how well a company's management is using its resources. There are two types of assets on a typical balance sheet. 1
What are the types of assets?
Common types of assets include current, non-current, physical, intangible, operating, and non-operating. Correctly identifying and classifying the types of assets is critical to the survival of a company, specifically its solvency and associated risks.
What is asset in business?
An asset is a resource owned or controlled by an individual, corporation. Corporation A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit.
What is the definition of current assets?
If assets are classified based on their convertibility into cash, assets are classified as either current assets or fixed assets. An alternative expression of this concept is short-term vs. long-term assets. 1. Current Assets. Current assets are assets that can be easily converted into cash and cash equivalents (typically within a year).
Why is asset classification important?
Importance of Asset Classification. Classifying assets is important to a business. For example, understanding which assets are current assets and which are fixed assets is important in understanding the net working capital of a company.
What is current asset?
Current assets are assets that can be easily converted into cash and cash equivalents (typically within a year). Current assets are also termed liquid assets and examples of such are:
How are assets classified?
Assets are generally classified in three ways: Convertibility: Classifying assets based on how easy it is to convert them into cash. Physical Existence: Classifying assets based on their physical existence (in other words, tangible vs. intangible assets).
What is the classification of assets?
If assets are classified based on their physical existence, assets are classified as either tangible assets or intangible assets. 1. Tangible Assets. Tangible assets are assets with physical existence (we can touch, feel, and see them). Examples of tangible assets include:
What Is an Asset?
The International Financial Reporting Standards (IFRS) defines an asset as “a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.”
What is asset in business?
Assets are resources a business either owns or controls that are expected to result in future economic value. Liabilities are what a company owes to others—for example, outstanding bills to suppliers, wages and benefits due to employees, as well as lease payments, mortgages, taxes and loans. As a note, for public companies, leased property ...
How to reflect wasting assets?
To reflect wasting assets’ reduction in value over time, accountants reduce the assets’ value on the balance sheet by applying depreciation (for tangible assets) or amortization (for intangible assets). Usage: Finally, an asset can be classified as operating or non-operating based on how a company uses it.
Why is asset classification important?
Properly classifying assets is important for company leaders to have an accurate picture of key financial metrics such as working capital and cash flow. Asset classification can also help a business qualify for loans—it gives the bank a clearer picture of the risk it’s taking on—work through bankruptcy and calculate tax liabilities.
Why is it important to distinguish operating assets from non-operating assets?
Distinguishing operating assets from non-operating assets also helps organizations see how each asset type drives overall revenue.
How long does it take for an asset to be converted into cash?
While any asset can be converted into cash within 12 months if the price is sufficiently discounted, current assets only include assets that are expected to be converted into cash within 12 months.
How are assets classified?
Assets can be classified based on a number of criteria. For companies, the correct classification is critical to financial reporting and evaluating the business’s financial health. Typically, assets are valued by the expected future cash flows they represent in their current condition, according to the IFRS.
What is alternative asset?
Alternative assets typically refer to investments that fall outside of the traditional asset classes commonly accessed by most investors, such as stocks, bonds, or cash investments . Due to their alternative nature, these investments may be less liquid than their traditional counterparts and may require a longer investment period before any material ...
What is asset owner?
Asset owners are the source of capital for investment in alternative assets. Below you will find definitions for some key investor types within alternative assets: Preqin Academy - How is the Industry Structured.
What is an illiquid asset?
An illiquid asset is one that is difficult to sell or exchange for cash compared to stocks and shares, which can be sold on the open market with relative ease. Alternative investments generally impose limitations on withdrawals ('lock-up periods' – discussed below) and have higher minimum investment thresholds, with few investors willing or able to purchase part, or all, of the asset at any given time.
Why are alternative investments so complex?
For this reason, most alternative asset investments are held by institutional investors or accredited, high-net-worth individuals. Due to their lack of regulation, private markets are notoriously opaque compared to public markets.
What is traditional investment?
Traditional investments are publicly traded investments in stocks, bonds, or cash. The traditional method of investing is via public markets, where companies sell shares to the general population via stocks exchanges, such as the FTSE, NYSE, and SSE. These types of investments are heavily regulated by financial authorities such as the SEC ...
What is an accredited investor?
An accredited investor is an individual with a net worth of over $1mn, or an entity or organization with assets valued at $5mn or more.
How long does an alternative investment fund have to be locked up?
Lock-up periods vary: for hedge funds it may be anything from 30 days to one year, but in the case of private equity or real estate investments, lock-up periods will often be 10 years or more.
What Are Other Current Assets (Oca)?
Understanding Other Current Assets
- Assets are broken down on the balance sheet as either fixed assets or current assets. Fixed assets are typically long-term tangible pieces of property, such as buildings, computer equipment, land, and machinery, that a firm owns and uses in its operations to generate income. They have useful lives that span over a year and are not liquid. Current assets, on the other hand, are all th…
Real-World Example of Other Current Assets
- For the quarter ending March 31, 2019, Microsoft Corp. (MSFT) recorded total assets of $263.28 billion on its balance sheet. Of this total, 61% were attributed to current assets. As you can see in the table above, other current assets (OCA) made up a small proportion of the $159.89 billion of current assets. They were listed at $7.05 billion, meaning they accounted for just 4% of the com…
Special Considerations
- Microsoft did not provide a clearer breakdown of its other current assets (OCA) in its latest 10-Qand 10-K statements. Because they represent a limited source of liquidity for a company and may not have a significant impact on a business’s overall financial situation, not adding more detailed information on them is common. When other current assets (OCA) are discussed, infor…
Properties of An Asset
Classification of Assets
- Assets are generally classified in three ways: 1. Convertibility: Classifying assets based on how easy it is to convert them into cash. 2. Physical Existence:Classifying assets based on their physical existence (in other words, tangible vs. intangible assets). 3. Usage:Classifying assets based on their business operation usage/purpose.
Classification of Assets: Convertibility
- If assets are classified based on their convertibility into cash, assets are classified as either current assets or fixed assets. An alternative expression of this concept is short-term vs. long-term assets.
Classification of Assets: Physical Existence
- If assets are classified based on their physical existence, assets are classified as either tangible assets or intangible assets.
Classification of Assets: Usage
- If assets are classified based on their usage or purpose, assets are classified as either operating assets or non-operating assets.
Importance of Asset Classification
- Classifying assets is important to a business. For example, understanding which assets are current assets and which are fixed assets is important in understanding the net working capital of a company. In the scenario of a company in a high-risk industry, understanding which assets are tangible and intangible helps to assess its solvency and risk. Determining which assets are oper…
Related Readings
- We hope you’ve enjoyed reading CFI’s guide to the different types of assets. To keep advancing your career, the additional resources below will be useful: 1. Free Reading Financial Statements Course 2. Net Identifiable Assets 3. Marketable Securities 4. Projecting Balance Sheet Items 5. Analysis of Financial Statements