item to which value is assigned any tangible or intangible item to which a value can be assigned. Assets can be physical, such as machinery and consumer durables, or financial, such as cash and accounts receivable, or intangible, such as brand value and goodwill.
Assets are typically broken down into five different categories. Current assets include cash, cash equivalents, marketable securities, inventories, and prepaid expenses that are expected to be used within one year or a normal operating cycle. All cash items and inventories are reported at historical value. Securities are reported at market value. Noncurrent assets, or long-term investments, are resources that are expected to be held for more than one year. They are reported at the lower of cost and current market value, which means that their values will vary. Fixed assets include property, plant and facilities, and equipment used to conduct business. These items are reported at their original value, even though current values might well be much higher. Intangible assets include legal claims, patents, franchise rights, and accounts receivable. These values can be more difficult to determine. Accounts receivable, for example, reflect the amount a business expects to collect, such as, say, $9,000 of the $10,000 owed by customers. Deferred charges include prepaid costs and other expenditures that will produce future revenue or benefits.