What Are The Of Import Features Of An Asset?

Important Features of an Asset

The of import features of an asset are depicted inwards the next image.

The vi of import features of an property are briefly listed every bit follows:

1. Asset has a cost or value inwards the market.
2. It must generate about revenue.
3. It has maintenance or repair cost.
4. It undergoes depreciation over a catamenia of time.
5. It has an estimated useful life span.
6. It likewise has a bit value.

Now let's beak over each of import characteristic of an property i yesteryear one.

1. Price or Value

An property commonly has a cost or value inwards the market. Such price, i.e. value of an property may survive either paid or is to survive payable.

Based on cost or value the property tin survive classified every bit follows:

1. Owned asset is that property whose cost or value is already paid.
2. Loaned assets is that property whose cost or value is to survive payable.

The payments made for the loaned assets are commonly known every bit EMI i.e. Equated Monthly Installments.

2. Generate Revenue

An property must select a capacity or potential to generate revenue.

For example, an property such every bit a establish amongst modern machineries tin survive used effectively to growth the production of goods. The organization shall e'er elbow grease to reach the installed capacity of such an property inwards the production of goods. This volition select higher revenue to the organization.

3. Maintenance Cost

An property commonly has a maintenance or repair cost.

Maintenance done often helps to avoid the irregular standstills inwards the business operations which if non done timely tin outcome inwards loss of revenue to the organization.

The maintenance cost occurs due to urgent repair requirements in addition to regular sessions of AMC (Annual Maintenance Contract). This cost must survive absorbed (sustained) to perish along the property business office smoothly.

4. Depreciation of an asset

An property commonly undergoes depreciation over a catamenia of time.

Depreciation is the distribution of the full cost of the property over the useful life of the asset.

Another cite of Depreciation is Amortization.

The depreciation (amortization) is calculated on the purchase value of a fixed property because of reasons every bit follows:

1. The property was used over time.
2. Certain total of fourth dimension has passed since its purchase.
3. The property is non longer inwards its master copy novel dry ground in addition to has to about extend degraded due to habiliment in addition to tear, environmental factors, storage, etc.

The depreciation which an property has undergone inwards a twelvemonth (annum) tin survive calculated using formula shown inwards the next image.

Note: click on the higher upwards icon to teach its zoomed preview inwards your browser.

5. Estimated Useful Life

An property commonly has an estimated useful life. It is an approximate life bridge of an property to deportment out in addition to perform diverse operations in addition to tasks for which it is designed or made. It is by in addition to large measured inwards years.

The seller (vendor) e'er communicates the estimated useful life of an property to its purchaser. The purchaser tin survive either an private or organization. This communication is done at the fourth dimension of sale of the asset.

If the estimation of useful life is impossible to ascertain yesteryear the vendor, or when a buyer disagrees amongst the seller, in addition to thus suggest of an skillful (recognised qualified professional) is considered to derive such estimation.

6. Scrap Value

As an property is used over fourth dimension to perform diverse functions, it starts losing its musical rhythm out life. That is, its estimated useful life gradually starts falling. After its life ends, it is no longer capable of performing tasks, operations or functions for which it was originally designed. It becomes a scarp only even thus holds about value inwards it. This concluding remaining value of a dead property is called a Scarp Value.

Scrap value is inwards the nature of cash receipt to the possessor of a dead asset.

The bit value generated is likewise a source of indirect (not regular) income of the business.

Conclusion on Asset Evaluation

Based on higher upwards discussion, nosotros tin conclude that of import features of an property must survive considered spell evaluating an asset.

With this understanding, an property must survive evaluated during:

1. Its acquisition or purchase.
2. While it is existence used or is nether operation.
3. At the fourth dimension of its realization or sale.

However, such an evaluation must survive analysed in addition to reviewed properly in addition to promptly nether the professional person guidance of experts.