The legal ownership is not the only criterion for something in accounting terms as an asset class; If someone buys an item on installment, but not the owner of that object until the full purchase price has been paid. Still, the item is still listed as an active along with the associated obligations. Likewise, although a tenant is never rented the item owner, he can take that point as an asset provided that the corresponding liability is also shown.
In an accounting sense ownership usually means ‘legal ownership’, but there are exceptions; an interest in a tangible or intangible property or any right to value transfer, coupled with the right of ownership and the right of use is also an asset for the person concerned.
If a person is the owner of the value or economic benefit arising from a specific source, then the source is a credit to the person and he is the beneficial owner, though he may not be the rightful owner to be.
The main function of accounting is to determine profit. However, monetization requires investment to the facilities needed by a company to provide continuous and work indefinitely.
Historically, costs incurred by it are not counted as an expense in the period deferred costs. From an accounting point of view, they represent an asset. If these costs can be recovered within a year, they are current assets and if they are recoverable over time they become assets.
The classification of assets is critical in determining the profits and also show the position of the company at a given time, in other words, the composition of the assets and the nature of his duties. They are not acquired for the purpose of resale. Fixed assets, products that generate income, or in other words, they must be used to produce the operations of the business. ”
The largest category of fixed assets in accounting terms is tangible, such as buildings, machinery and vehicles. Land that is not subject to depreciation or depletion through the use, because it is never “consumed” is also considered as a tangible asset. In the assessment of buildings, machinery and vehicles, these assets are subject to depreciation annually to be distributed as a cost. Natural resources, using, are also subject to depletion, such as mining, oil and gas and plantations are also considered tangible assets.
Another group of assets Intangible assets such as patents, copyrights, trademarks and goodwill. Deferred costs and expenses, including construction costs of a company are also considered accounting as intangible assets.
Finally, the last to be considered an active external assets also known as investment. These include fixed period earning a fixed income investments in common stocks of other companies, various investments such as pension funds, housing schemes and insurance and, finally, investment property.