Question

What is the Asset Section of the Balance Sheet trying to communicate? How would you explain 1) what assets are; and 2) what their valuation represents?

Answer 1

Answer : Every Companies Balance sheet one section comprises of Assets and other section is for Liabilities and equities. Assets are those resources which are used by the company to generate income in normal course of Business , i.e which are holding of Company used to operate the business of Asset. Assets also repercsents how much investment does the company have for its owner while it also gives idea for the amount of money available to pay its liability.

1.)Meaning of Assets

Assets are those resources which are controlled by entity to generate future Economic Benefit .Control can be obtained either by owning the asset or by restricting its use by other. Assets can be Non Current Assets , Current assets and Property Plant and Equipment

2.)Asset valuation helps in determining the fair market value assets, using various methods such as discounted cash flow method, option pricing methods or comparables with the enterprises in the industry.The process helps to know the most appropiate price of asset .