Mortgage Glossary
Build up your knowledge by using our
mortgage glossary, here to help you
understand the sometimes confusing terms
used to describe mortgages and other
financial related products. We have
laid out our glossary in an easy to use A-Z
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Definition: Assets
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The main sense in which the term asset is used is to describe anything owned by an individual or business which has a monetary value. Some assets are relatively easy to measure - debtors, cash, stock and so on. Others are more difficult - goodwill, intellectual property, and brand values. In the context of a company's balance sheet, an asset is also a deferred cost. Equipment valued at £1m in a balance sheet represents £1m which the company spent and which is being depreciated as the equipment exhausts its usable life. The question of whether that equipment is actually an asset or a liability is really whether that asset generates more in after-tax revenues than it costs. If not, it is hardly something accruing to the benefit of the company and its shareholders.
More generally, 'asset' is used to describe a class of investment product. So, shares, property, and bonds are all asset classes. Hence the phrase used in portfolio management - 'asset allocation'.
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