Assets – firm’s economic resources

Current Assets

• Cash
• Assets that will be converted into cash
• Assets that will be used up within one year or operating cycle.

Major types of current assets:

• Cash or cash equivalents- <90>
• Short-term investment (marketable securities)-within 1 year, valued at market value
• Account receivable -can be used as collateral for borrowing; factoring-sold or transferred to another party; “allowance for bad debt” as contra account.
• Inventory- the lower of cost or market value, if cost is greater than market value, ending inventory is written down to the lower replacement market prices.
• prepaid expense – become expense items in future income statement

Non-Current Assets

• Assets that will not be converted into cash
• Assets that will not be used up within one year or operating year Types of non-current assets
  
• Property, plant, equipment – accumulated depreciation as contra account
• Investment in affiliates – accounted for using equity method
• Deferred tax assets
• Intangible assets – not in physical form, e.g. patents, trademarks, license and goodwill.
• Long-term investments: Often referred to simply as investments. They are to be held for many years, and are not acquired with the intention of disposing of them in the near future.