What is a Business Asset?
A business asset is any tangible or intangible asset that is expected to be utilized in the business operation for an extended period of time. Assets of this type normally include computer and other office equipment, furniture, or buildings. In many areas of the world, intellectual property is also considered a business asset, since that property provides ongoing benefit or use to the company.
Not every item that is purchased for use in a business operation can properly be identified as a business asset. Items that are intended for short-term consumption typically are excluded from this category of assets. This means that items like copy paper, pens and pencils, toner and ink for printers and fax machines, or envelopes do not qualify as business assets, even though they are used as part of the normal operation of the business. The same is true for items like coffee makers or water coolers; while these items do indirectly contribute to the morale of employees and help increase production, they are not considered true business assets.
In contrast, a vehicle that is used in the ongoing operation of a business is likely to benefit the company for several years and would qualify as a business asset. In like manner, properties such as warehouses where raw materials or finished goods are stored would also count as this type of asset. In the way of intangible assets, copyrights on brands, designs, and other intellectual property generated under the auspices of the company and have a long-term impact on the business operation would also be considered a business assets. Production machinery that is intended for use over a number of years also meets the basic definition of a business asset.
Identifying property or some other holding as a business asset is often necessary in order to calculate business taxes. Many nations allow businesses to claim some amount of depreciation annually on these types of assets. For example, it is often possible to claim depreciation on machinery used in the production of goods and services, as well as vehicles that are routinely used in the ongoing operation of the business. Assets of this type are also important when presenting the overall value of the company to investors or prospective buyers. Corporate raiders also look closely at the amount and type of business assets, especially if the idea is to acquire the business, then sell off those assets in order to generate a profit.
Discuss this Article
Post your comments