ASSET

asset. 1. An item that is owned and has value. 2. (pl.) The entries on a balance sheet showing

the items of property owned, including cash, inventory, equipment, real estate, accounts receivable,

and goodwill. 3. (pl.) All the property of a person (esp. a bankrupt or deceased person) available

for paying debts or for distribution.

accrued asset.An asset arising from revenues earned but not yet due.

admitted asset.An asset that by law may be included in evaluating the financial condition of

an insurance com-pany. Cf. nonadmitted asset. [Cases: Insurance    1363. C.J.S. Insurance § 168.]

appointive asset.An asset distributed under a power of appointment.

assets by descent.The portion of an estate that passes to an heir and is sufficient to charge the

heir with the de-cedent’s specialty debts. — Also termed assets per descent.

assets in hand.The portion of an estate held by an executor or administrator for the payment

of debts chargeable to the executor or administrator. — Also termed assets entre main; assets entre

mains.

assets per descent.See assets by descent.

asset  under  management.A  securities  portfolio  for  which  an  investment  adviser  provides

ongoing, regular su-pervisory or management services.

capital  asset.  1.  A  long-term  asset  used  in  the  operation  of  a  business  or  used  to  produce

goods or services, such as equipment, land, or an industrial plant. — Also termed fixed asset. 2.

For  income-tax  purposes,  any  of  most assets  held  by  a  taxpayer  except those  assets specifically

excluded by the Internal Revenue Code. • Excluded from  the definition are, among other things,

stock in trade, inventory, and property held by the taxpayer primarily for sale to customers in the

ordinary  course  of  trade  or  business.  [Cases:  Internal  Revenue    3230.1–3261.  C.J.S.  Internal

Revenue §§ 127–145, 490–491, 671.]

commercial assets.The aggregate of available property, stock in trade, cash, and other assets

belonging to a merchant.

current asset.An  asset  that  is readily  convertible  into  cash,  such  as  a  marketable  security,  a

note,  or  an  account  receivable.  —  Also  termed  liquid  asset;  quick  asset;  near  money;  financial

asset.

“Current assets are assets expected to be converted to cash, sold, or consumed during the next

twelve months, or within the business’s normal operating cycle if the cycle is longer than a year.

The  operating cycle is the  period  from  the time that  cash is used to acquire goods and services,

these goods and services are sold to customers, and the accounts receivable from these customers

are  collected  in  cash.  For  a  small  retail  store,  the  operating  cycle  may  be  only  a  few  weeks  or

months.  For  a  shipbuilding  company,  however,  the  normal  operating  cycle  could  run  several

years.” Jay Alix & Elmer E. Heupel, Financial Handbook for Bankruptcy Professionals § 9.2, at

354 (1991).

dead  asset.A  worthless  asset  that  has  no  realizable  value,  such  as  an  uncollectible  account

receivable.

earning  asset.(usu.  pl.)  An  asset  (esp.  of  a  bank)  on  which  interest  is  received.  •  Banks

consider loans to be earning assets.

equitable asset.An asset that is subject to payment only in a court of equity.

financial asset.See current asset.

fixed asset.See capital asset (1).

frozen asset.An asset that is difficult to convert into cash because of court order or other legal

process.

hard asset.See real asset.

hidden asset.An asset carried on the books at a substantially reduced or understated value that

is considerably less than market value.

illiquid asset.An asset that is not readily convertible into cash, usu. because of (1) the lack of

demand, (2) the absence of an established market, or (3) the substantial cost or time required for

liquidation (such as for real property, even when it is desirable).

individual  asset.(usu.  pl.)  Property  belonging  to  a  member  of  a  partnership  as  personal

property, apart from the firm’s property. [Cases: Partnership    67. C.J.S. Partnership §§ 70–72.]

intangible asset.Any nonphysical asset or resource that can be amortized or converted to cash,

such as patents, goodwill, and computer programs, or a right to something, such as services paid

for in advance.

legal asset.A decedent’s asset that by law is subject to the claims of creditors or legacies. —

Also  termed  probate  asset.  [Cases:  Executors  and  Administrators    38.  C.J.S.  Executors  and

Administrators §§ 2, 121, 130.]

liquid asset.See current asset.

mass asset.An intangible asset, such as a dominant market position, that is made up of several

components but that is considered a single entity for purposes of depreciation, because the loss of

any component of the asset is replaced by new components, so that the whole asset has little or no

fluctuation in value. • An entity with a dominant market position might lose a vendor but, because

of  its  dominant  market position,  still be  able to  replace  the  loss with  a  new  vendor. The  market

position is therefore considered a mass asset.

net assets.See net worth under WORTH.

net  quick  assets.The  excess  of  quick  assets  less  current  liabilities.  See  QUICK-ASSET

RATIO.

new  asset.Wills  &  estates.  In  the  administration  of  a  decedent’s  estate,  property  that  the

administrator or executor receives after the time has expired to file claims against the estate.

nominal asset.An asset whose value is difficult to assess, such as a judgment or claim.

nonadmitted  asset.An  asset  that  by  law  may  not  be  included  in  evaluating  the  financial

condition  of  an  insurance  company  because  it  cannot  be  converted  quickly  into  cash  without  a

financial loss. Cf. admitted asset. [Cases: Insurance    1363. C.J.S. Insurance § 168.]

nonprobate  asset.Property  that  passes  to  a  named  beneficiary  upon  the  owner’s  death

according to the terms of some contract or arrangement other than a will. • Such an asset is not a

part of the probate estate and is not ordinarily subject to the probate court’s jurisdiction (and fees),

though  it  is  part  of  the  taxable  estate.  Examples  include  life-insurance  contracts,  joint  property

arrangements  with  right of  survivorship,  pay-on-death  bank  ac-counts, and  inter  vivos trusts. —

Also termed nonprobate property. Cf. WILL SUBSTITUTE.

personal asset.An asset in the form of money or chattels.

premarital asset.Property that a spouse owned before marrying. • In most jurisdictions, this is

part  of  the  spouse’s  separate  property.  See  SEPARATE  PROPERTY.  Cf.  COMMUNITY

PROPERTY.

probate asset.See legal asset.

quick asset. 1. Cash and other current assets other than inventory. 2. See current asset.

real asset. 1. An asset in the form of land. 2. Loosely, any tangible asset. — Also termed hard

asset. tangible asset.An asset that has a physical existence and is capable of being assigned a value.

wasting  asset.An  asset  exhausted  through  use  or  the  loss of  value, such  as  an  oil well  or  a

coal deposit.[Blacks Law 8th]