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When assets become impaired, their value must be adjusted. If a company holds an account receivable from another company that goes bankrupt, the receivable must be written down to the amount (which is very possibly zero) that will eventually be received. Fixed, or long term assets are usually subject to [[depreciation]], accounting for normal wear and tear on the asset, which decreases it's value. Real estate is the only long-term asset that is normally not subject to depreciation, as it tends to increase, rather than decrease in value over time.
When assets become impaired, their value must be adjusted. If a company holds an account receivable from another company that goes bankrupt, the receivable must be written down to the amount (which is very possibly zero) that will eventually be received. Fixed, or long term assets are usually subject to [[depreciation]], accounting for normal wear and tear on the asset, which decreases it's value. Real estate is the only long-term asset that is normally not subject to depreciation, as it tends to increase, rather than decrease in value over time.
A businesses net assets (or ''net worth'') is the excess of assets over liabilities.
A business's net assets (or ''net worth'') is the excess of assets over liabilities.
[[Category:Accounting terms]]
[[Category:Accounting terms]]