Chapter 10 Assets b Recognize importance of assets

Chapter 10 Assets b Recognize importance of assets in new view. b Define assets. b Identify concerns about the definition of assets.

Importance of B/S b No, the Balance Sheet! b Importance… b Start with assets….

Assets-Their Nature b 3 Reasons for New Importance b What are they? b Easy to imagine…

Asset Definition b SFAC 6 definition • Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. b 1980 ? Why so hard to define assets?

Assets b SFAC 6 required elements: b probable (Reasonably Expected) b f. e. b. in cash flows (direct & indirect) b controlled: exclude; shared b past transaction b Lottery ticket: first issue

Asset Valuation b Valuation not value b Two Valuation models

Asset valuation b Dominant vs. Consistent with definition ? b Lottery ticket case, second issue- $ b Third issue, effect of secondary market

Asset Issues b Controversy: W. Schuetz b Two concerns…. b Cash, claims to cash or services and things that can be sold separately for cash. b Agree with him?

Asset issues b Controversy: Samuelson b Assets vs expenses b Economic (benefit) vs legal (proprietary) components

Other Asset Definition Concerns b Probable? 65%, 79%, 80% or whatever b Past trans or event? b Transaction based?

Reporting Assets b Classification