Asset

In Accounting, an Asset is a thing with future value. In certain cases, such a 'thing' may be intangible. Assets can be categorized in various ways:

Monetary Assets are those that consist of cash or will be converted to cash. An example of a monetary asset is Accounts Receiveable.

Nonmonetary assets will not be converted to cash. Machinery and Equipment owned by a company will be shown as an asset, but such assets are not normally converted to cash.

Assets may also be considered as Current or Non-current. Theoretically, a Current asset is one that will be converted to cash (directly or indirectly) within the business entity's operating cycle. Practically speaking, Current Assets are always measured as being due within one year.

Non-current or Long Term assets extend beyond one year. The previous example of Machinery and Equipment also applies here, but not all Long Term Assets are non-monetary or vice versa.

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.