Krupetskiy_Research3 - Tanya Krupetskiy Professor Turner...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Tanya Krupetskiy Professor Turner ACC – 211 Week 4 Research Assignment 3 (a) The three essential characteristics of assets. As defined in the FASB Statements of Financial Accounting Concept #6, “assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events” (FASB Concept Statement #6, 25). An asset has three essential characteristics: 1) it embodies a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflows, 2) a particular entity can obtain the benefit and control others’ access to it, and 3) the transaction or other event giving rise to the entity’s right to or control of the benefit has already occurred (FASB Concept Statement #6, 26). The following features are not characteristics of assets: assets may be acquired at a cost and they may be tangible, exchangeable, or legally enforceable (26). Under their definition assets are also commonly referred to as economic resources that are “useful for carrying out economic activities, such as consumption, production, and exchange” (27). Whether in a business entity or a not-for- profit organization, all assets have one characteristic in common – “service potential” or “future economic benefit” (28). Among the most important assets is money. Money’s purchasing power is “the basis of its value and future economic benefits” (29). Other assets, other than money, also produce economic benefits because they can be exchanged for cash or other goods and services (30). On the other hand, services provided by other entities can only
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
be assets momentarily. However, “their use may create or add value to other assets of the
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 5

Krupetskiy_Research3 - Tanya Krupetskiy Professor Turner...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online