If you think that the term ‘current assets’ refers to your personal possessions, you are wrong. Strictly speaking, assets are not current until you take them out, sell them or pass them on. There is a distinction between ‘current assets’ and ‘non-current assets’. General current assets include income, wealth, claims on the property, accounts receivable, inventory, supplies and machinery, depreciated capital and financial instruments such as bonds, debentures, shares and mortgages. Non-current assets, on the other hand, include liabilities such as accounts payable and accrued expenses.
Another question that arises is what is included in current assets for an accountant? The answer is: everything that is a physical asset in your office or business. This includes furniture, raw materials and machinery, office documents and stationery, office supplies and equipment, inventory, intellectual property, trade secrets and licensing programs. Other items such as current assets that are not necessarily restricted are goodwill, trade names, public records and contracts.
Current assets do not necessarily have to be liquidated or terminated. However, when you sell, buy or trade any of your assets, you must immediately de-value them. De-valuing will create cash and gain expense recognition. For instance, if you sell some office documents, you will gain cost benefit and realize a profit when you pay money for them. However, you lose the cost benefit and a liability when you buy them.
What is included in current assets is determined by the terms and conditions of the contract at the time of the sale or purchase. You cannot simply decide what is included in current assets and ignore other aspects. The terms and conditions of the sale or purchase of an asset must agree with what is included in current assets. Even if the contract specifically excludes some items from being included in the valuation of your assets, it will still need to be determined as to what is included in current assets so that the transaction can be concluded. When you receive an asset evaluation from a registrant or a buyer agent, it is important to review the inventory lists to make sure that all items are included. Then you need to make sure that the price that was initially given to you is what was originally agreed on.
One of the most common questions that arises after a company is created or sold is, what is included in current assets? For example, during a company setup, a new director may be appointed, and the company begins operations. It is common for the board to assign each director a value in the range of one hundred to one thousand shares of stock. It may be difficult for the new director to value the shares because they were not issued during the company setup.
Once a company becomes operational and begins trading, there is a chance that the stock will appreciate or depreciate. Directors cannot increase the value of the company by selling the stock. If the company is involved with more than one stock, the value of all the stocks must be submitted in a shareholders’ meeting. This process of submitting a value for the stock takes time, usually a month or more, depending on the number of stock holders. This is why a standard value for the company must be established in the beginning of the company.
There are a few other questions that may arise about what is included in current assets. For example, will a gift or donation be taxed until it is received? Will a lease be recorded as a loan? Will a note be required for a stock option? The answers to these questions depend on the circumstances of the transaction, but a general guideline is that if the transaction involves cash, a receipt or confirmation will be required.
What is included in current assets for an individual will vary greatly. In many cases, the assets of an individual will include money held in retirement and other funds. The assets of a corporation will often include the stock of the company, property located in the company’s name, and the stockholder’s equity.