UNIT 18

ASSETS

A. READING

In financial accounting, an asset is an economic resource. Anything tangible or

intangible that can be owned or controlled to produce value and that is held by a
company to produce positive economic value is an asset. Simply stated, assets
represent value of ownership that can be converted into cash (although cash itself
is also considered an asset).

The balance sheet of a firm records the monetary value of the assets owned by that
firm. It covers money and other valuables belonging to an individual or to a
business. One can classify assets into two major asset classes: tangible assets and
intangible assets. Tangible assets contain various subclasses, including current
assets and fixed assets. Current assets include inventory, while fixed assets
include such items as buildings and equipment. Intangible assets are nonphysical
resources and rights that have a value to the firm because they give the firm some
kind of advantage in the marketplace. Examples of intangible assets include
goodwill, copyrights, trademarks, patents and computer programs, and financial
assets, including such items as accounts receivable, bonds and stocks

One of the most widely accepted accounting definitions of asset is the one used by
the International Accounting Standards Board. The following is a quotation from
the IFRS Framework: "An asset is a resource controlled by the enterprise as a
result of past events and from which future economic benefits are expected to
flow to the enterprise. This means that:
The probable present benefit involve a capacity, singly or in combination
with other assets, in the case of profit oriented enterprises, to contribute
directly or indirectly to future net cash flows, and, in the case of nonprofit
organizations, to provide services;
The entity can control access to the benefit;
The transaction or event giving rise to the entity's right to, or control of,
the benefit has already occurred.

Employees are not considered assets like machinery is, even though they can
generate future economic benefits. This is because an entity does not have
sufficient control over its employees to satisfy the Framework's definition of an
asset. Resources that are expected to yield benefits only for a short time can also
be considered not to be assets, for example in the USA the 12 month rule excludes
items with a useful life of less than a year. Similarly, in economics an asset is any
form in which wealth can be held.

Assets are listed on the balance sheet. On a company's balance sheet certain
divisions are required by generally accepted accounting principles (GAAP), which
vary from country to country. Assets can be divided into e.g. current assets and
fixed assets, often with further subdivisions such as cash, receivables and
inventory. Assets are formally controlled and managed within larger organizations
via the use of asset tracking tools. These monitor the purchasing, upgrading,
servicing, licensing, disposal etc., of both physical and non-physical assets.

Downes, John., Goodman, Jordan Elliot., Finance and Investment Handbook, Sixth Edition,
Barron's Educational Series, Inc., 2003

PRACTICE 1; COMPREHENSION
Answer the following questions based on the information you can find on the text
1. What is an asset?
2. Mention the two major asset classes!
3. What does a tangible asset contain?
4. What is intangible asset?
5. What is the definition of asset according to the International Accounting
Standards Board?
6. Employees are not considered as assets. Explain!
7. Explain how to control and manage the asset!
PRACTICE 2; COMPREHENSION
Read again the text carefully, then identify the statements below. Write T if it is
TRUE or F if it is FALSE
1. Cash is not considered as an asset
2. Assets are recorded in the balance sheet
3. current assets and fixed assets are the intangible assets
4. Office, stationaries are the fixed assets
5. Intangible assets does not give any value to the company
6. Employees are also the assets because they can generate future economic
benefits
7. There is no ways of controlling the assets

PRACTICE 3; VOCABULARY BUILDING

Match the terms in column A with their meanings in column B

A B
1. Tangible Assets a. An asset such as receivables, inventory, work in
2. Intangible process, or cash, that is constantly flowing in and out
Assets of an organization in the normal course of its business,
3. Current Assets as cash is converted into goods and then back into
4. Fixed Assets cash.
5. Sufficient b. Cash, equipment, machinery, plant, property anything
6. Exclude that has long-term physical existence or is acquired for
7. Tracking Tools use in the operations of the business and not for sale to
8. Disposal customers.
c. When a company wants to relinquish an asset, the
company will sell the asset.
d. To keep out, or not to include
 e. Any tools used in Monitoring a collection a stocks,
whether held in a real or imaginary portfolio, for the
purposes of learning how the prices move or profiting
from those movements. Usually done with software or
via the internet
f. Something of value that cannot be physically touched,
such as a brand, franchise, trademark, or patent.
g. adequate for the purpose; enough
h. any long-term asset, as a building, tract of land, or
patent.

PRACTICE 4; VOCABULARY BUILDING

Fill in the blanks in the sentences below with the correct words/ terms from
PRACTICE 3
1. You should always try to have a good..................................available for sale in
case you need some liquidity quickly.
2. Our company purchased a building in order to show the investors that their
money was going towards........................
3. The company has started a systematic.........................of its property
4. The interest charges have been excluded from the document.
5. We were able to engage the latest................. securities which provided useful
and insightful feedback to our assests
6. In the working environment one................. you need to guard is your good
name and the respect of your superiors and coworkers.
7. All the company needs to survive from the economic crisis is
............................. high quality workers
8. Growth depends far too much on ....................... investment, notably in
infrastructure and real estate construction.

PRACTICE 5; WRITING;
Compose a sentence from each words/ terms in PRACTICE 3 with your own
words.

B. GRAMMAR REVIEW; PHRASAL VERBS 2

Phrasal verb is an idiomatic phrase consisting of a verb and another element,

typically either an adverb, as in break down, or a preposition, for example see
to, or a combination of both, such as look down on.
1. GIVE UP = stop having or doing
She has finally given up smoking
I had to give up coffee when I was ill.
He gave up chocolate for a month.
 2. MAKE UP = be the parts that form something (often used in the
passive with 'of')
Women make up 46% of the employees here
This class is made up entirely of boys
People who can speak English make up a quarter of the world's
population.

18. END UP = finally do or be something, especially when you don't expect it

We ended up going back home because it was raining so hard.
They ended up passing the last exam, even though they failed all the other
exams.
Be careful! You'll end up without a job if you are rude to your boss.
19. GET BACK = arrive somewhere again, especially your home (+ to +
place)
She got back to Paris last night.
What time did you get back yesterday?
We got back very late because the train was delayed.
20. LOOK UP = raise your eyes
She looked up from her computer and asked a question.
I called his name, but he didn't look up.
John looked up from his book when Julie came in.
21. FIGURE OUT = think about until you understand / plan (more common
in USA)
Let's figure out how we can get to London very early in the morning.
She couldn't figure out why he had left.
He finally figured out that the cat must have broken the plate.
22. SIT DOWN = change from standing to sitting
Do please sit down.
She sat down and took out her book.
The children sat down in rows and crossed their legs.
23. GET UP = change from lying or sitting to standing (more casual than
'stand up')
She got up when we arrived (= she was sitting and she stood up).
I don't want to get up. It's so comfortable sitting here.
What are you doing on the floor? Get up!
24. TAKE OUT = remove from a container (+ of before a noun)
She took the letter out of the envelope.
I'll take the sweets out of the box and put them under the Christmas tree
now.
He took his clothes out of the suitcase and put them away in the wardrobe.
25. COME ON = we say this to encourage someone to go faster or try harder
Come on! You're going to be left behind.
Come on, don't worry. It's all going to be fine.
She kept telling me to come on, but I was already going as fast as I could.
26. GO DOWN = move to a lower place (+ to + place)
She started to go down the stairs.
We went down to the caf and bought some coffee.
Let's go down to the cellar and see if we can find those books.
27. SHOW UP = arrive at or come to an event / meeting (especially if there's
something surprising)
We all went to the party, but Lucy didn't show up.
He showed up at the meeting two hours late. Julie was very angry.
I wonder if John's going to show up today. He didn't come last time.
28. TAKE OFF = remove clothes or jewellery
I took off my coat because it was very hot.
She always takes off all her rings before she goes to bed.
Is it okay to take off my shoes?
29. WORK OUT = think about until you understand / plan (more common in
UK)
We need to work out how to get to the wedding.
She couldn't work out how the bird had got into the living room.
I don't know why the car won't start but I'll work it out.
30. STAND UP = change from lying or sitting to standing (less casual than
'get up')
Please stand up when the queen comes in.
She finished her coffee, stood up, and left the restaurant.
He stood up to let an old man have his seat.

http://www.perfect-english-grammar.com

A. PRACTICE 6; Combine the two sentences by using the correct coordinate