Question

Browning Inc. is a small start-up software development firm. It currently owns computer equipment worth $30,000; has cash on hand of $75,000 contributed by Browning’s owners. For the transaction below, identify the real and/or financial assets that trade hands.

Browning uses the cash from the bank loan along with its initial cash on hand to finance the development of new social network monitoring software, which it patented and copyrighted

Answer 1

Browning Inc. currently owns computer equipment worth $30,000 - This is a Real Asset;

and has cash on hand of $75,000 - This is a Financial Asset, contributed by Browning’s owners. (Capital)

For the transaction below, the real and/or financial assets that trade hands are identified in bold:

Browning uses the cash (Financial Asset) from the bank loan (Financial Liability) along with its initial cash on hand (Financial Asset) to finance the development of new social network monitoring software (Intangible Asset), which it patented and copyrighted

Real Assets are Tangible in Nature like Property, Equipment, Machinery etc;

Financial Assets are liquid type and are supported by a contractual right or an ownership claim; Examples are Cash, Bank Deposits, Mutual Funds, Bonds, etc

Intangible Assets: These are the assets with no physical presence, however, having value and can derive economic benefits; Examples : Software, Patents, Trademarks, Brand, etc