Asset mean resources , things or rights of value owned by a business undertaking.

“Tangible objects or intangible rights owned by an enterprise and carrying probable future benefits”

This means that the asset has capacity to provide services or benefits to the enterprise that use them.

it can used to produce or otherwise increase the value of other assets.

It can also used to settle liabilities .

Income determination :

Determination of financial position :

Managerial decisions :

Asset valuation methods

A measure of value used in accounting in which the price of an asset on the balance sheet is based on its nominal or original cost when acquired by the company.

Historical cost

2000-01 yr :-20 Crore

2010-11yr :-40 Crore

liabilities Amount Assets Amount

Fixed assets 20 Crore

B/S of 2000-01

B/S of 2010-011

liabilities Amount Assets Amount

Fixed assets 20 Crore

The cost to replace the assets of a company or a property of the same or equal value. The replacement cost asset of a company could be a building, machinery, stock , accounts receivable or liens. This cost can change depending on changes in market value.

Replacement cost

2000-01 yr :-20 Crore

2010-11yr :-40 Crore

liabilities Amount Assets Amount

Fixed assets 20 Crore

B/S of 2000-01

B/S of 2010-011

liabilities Amount Assets Amount

Fixed assets 40 Crore