What Is Assets, Definition, Types of Assets and Complete Examples

What is Asset, Definition, Types of Assets and Complete Examples – A safe way to cultivate wealth other than saving and investing is to increase assets.

Naturally, if people who are rich must have many assets of various types. For your deeper understanding, here is a complete explanation of what an asset is and an example.

What is an Asset?

For starters, you need to know about the meaning of assets in general. In the Big Indonesian Dictionary, an asset is defined as something that can be in the form of capital or wealth that has an exchange value.

It could be said that the definition of an asset is a person’s wealth in the form of cash or other forms of value. For example, you have a car, land and building houses, rice fields and shops. So, these valuable objects are assets that you have.

The term asset is also interpreted as tangible or intangible objects that provide benefits in the future. Objects that are categorized as assets can be valued in units of money.

Assets can be owned by individuals, organizations or companies. Generally, assets that are under the ownership of a particular company or organization are listed in full in the financial statements. That way, the asset value can be evaluated by the team for better management.

Asset Properties

More deeply about assets, there are 3 properties that you need to know. In general, these 3 traits include economic value, a valuable resource and owned by a person.

1. Economic Value

Every asset in any form has a promising economic value. The owner is free to sell assets to reap large profits or buy new assets to increase the value of his wealth.

2. Valuable Resources

Assets are valuable resources because they hold great economic potential in the future. The value of an asset, such as land and buildings, tends to increase over time so that it is useful for the life of the owner later.

3. Ownership

Furthermore, assets are not ownerless wealth that can be claimed by just anyone. Assets are assets that are legally owned by certain individuals, companies or organizations. Whatever the form, assets reflect how much property a person owns.

Asset Types

It is not enough just to understand what assets are, knowledge of their types is also important so that you can classify them correctly. Based on their physical existence, assets are divided into 2, namely tangible and intangible assets. Full explanation below:

1. Tangible Assets

The definition of tangible assets is wealth that is physically visible and has value that can be utilized by the owner. Examples of tangible assets include cash, houses, land, vehicles, jewelry, merchandise and machinery. Here’s a point-by-point explanation:

2. Cash

Cash is commonly understood as a legal medium of exchange for transactions in everyday life. Wealth in the form of cash is the most easily liquidated asset without taking a lot of time.

In addition, assets in the form of cash you can use at any time, even to meet urgent needs. Cash is an example of the most common asset used by individuals, companies and institutions.

3. Home

There is also a tangible asset called a house. The definition of a house asset is a type of building that functions as a permanent residence built on land with a certain area.

Buying a house is an asset that can last for many years, longer than an asset in the form of cash. Homeowners can sell the dwelling after a certain period of time.

Not only owned by individuals, houses built by developers in housing complexes are also valuable assets.

4. Land

It is called a tangible asset because land is physically visible. Although land is not an asset that is easy to liquidate in a short time, this type of asset has the potential to increase in value over time.

If you buy land for 50 million rupiah, then in the next few years, the price can soar up. Moreover, if the land you own is located in a strategic area.

This fact is the reason many people choose land as a long-term asset. The usefulness of land is indeed very long and gives high profits when resold.

6. Vehicle

You could say that the vehicle is a tangible asset that is fixed. That is, vehicles, both cars and motorbikes, can be used by the owner for a long time.

Later, the vehicle can be sold at any time for various reasons. However, vehicles such as cars and motorcycles tend to decline in price from year to year.

So, when you buy an expensive car, a few years later the selling price will drop. Even so, assets in the form of vehicles are still valuable because their usefulness lasts a long time and can bring in money when sold.

7. Securities

Furthermore, the notion of what is a securities asset is a type of wealth belonging to an individual, company or institution that is worth money. Securities are assets that are protected by law and are legally used for payment, collection or other transactions.

Examples of securities that apply in Indonesia are money orders, shares, checks, receipts, debt securities, promissory notes and delivery orders. Securities are also called current assets or liquid assets that are easily converted to other forms.

8. Machine

Tangible assets called machines are fixed assets that can be used for more than a year. In general, machines are used by large factories or SMEs to produce goods that have monetary value.

The machines used in business operations become valuable assets that bring high profits to the company. Unfortunately, the machine is difficult to disburse as cash so it is not suitable for paying urgent needs.

9. Jewelry

What is a jewelery asset? Jewelry is a type of tangible asset that can be in the form of rings, necklaces, earrings and earrings. Assets in the form of jewelry are quite easy to convert into cash to fund needs on the spot.

However, the price of gold jewelry tends to be volatile, aka it can be expensive at certain times and can go down at other times. Therefore, you need to pay attention to market conditions before deciding to sell jewelry so you don’t lose.

10. Intangible Assets

Furthermore, intangible assets are assets that are not physically visible but still have value and use for the rightful owner. The category of intangible assets consists of patents, copyrights, goodwill and trademarks. The following is a detailed description:

11. Copyright

Understanding what is a copyright asset is a type of asset in the form of the creator’s exclusive right to a work that is created. If you create a book, song or brand, then you must apply for a copyright to the Ministry of Law and Human Rights.

The purpose of filing a copyright is to avoid plagiarism of works by certain individuals. If your work has not been legally patented, it is likely to be recognized or imitated by others.

Works that already have a copyright in your own name will be guaranteed safety and become a valuable asset that brings profits.

12. Patents

It is classified as an intangible asset because patents are assets that are not physically visible. Patent rights are exclusive rights owned by investors for their inventions in the field of technology.

Patent rights have a validity period of 10 years or 20 years since the patent application is received. The requirement to be able to apply for a patent is to create a new invention.

For example, you work in a company that manufactures cars. In its development, the company’s team succeeded in creating a unique technology that characterizes the cars produced by the company. If so, then you can apply for a patent.

13. Trademark

Furthermore, a trademark is a type of intangible asset in the form of a design, name, sign or expression that characterizes a particular service or product. Things that become trademarks of goods must be legally protected so that their ideas are not stolen by unscrupulous persons.

If you individually or together with other people create a trademark, it is obligatory to register the trademark with the Directorate General of Intellectual Culture.

14. Goodwill

What is goodwill asset is defined as an intangible asset that is physically derived from the acquisition of a business by someone else. The value of goodwill arises because of the gap between the purchase price of a business and the book value of the business.

The term goodwill is synonymous with assets contained in the company’s balance sheet. This category of intangible assets is valuable but cannot be measured with certainty.

The Importance of Asset Management

It’s understandable that assets have economic value, right? Therefore, assets must be managed effectively so that their value remains stable and can be maximized to achieve certain goals. Asset management is needed, both in the form of assets owned by individuals, companies and organizations.

In simple terms, asset management is the proper management of wealth which is the right of individuals and groups. Assets may be considered as a source of funding or business investment that the owner uses for a specific purpose.

Asset management certainly should not be arbitrary and must be done effectively. Therefore, every company must have a special management to manage assets so that they are not damaged, lost and lost. The objectives of asset management include:

  • Reduce the risk of loss and damage to assets
  • Protect the existence of owned assets so that they can be used to the fullest
  • Make it easier for a company or organization to calculate threats that may occur in the future. In this way, risks can be effectively minimized
  • Keeping the value of an asset stable
  • Avoiding someone to over-purchase another asset
  • Ease of budgeting.

It is clear that the definition of an asset is a tangible or intangible object that is controlled, arising from past transactions and having economic benefits in the future.

There are certain types of assets that have not been sold for a long time, such as land, buildings, office equipment and factory machinery. However, there are other types of assets that can be immediately disbursed to pay for urgent needs, for example cash, merchandise and jewelry.

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