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Wasting Assets

A wasting asset is an asset that loses value over time through use, such as vehicles, machinery, mines, and quarries. Options contracts also lose their time value as they approach expiration. Assets classified as wasting may be treated differently for tax purposes by applying depreciation to account for the loss in value. Current assets include stocks, prepaid expenses, bills receivable, cash, and accrued incomes, while liquid assets also include short-term loans, advances, and investments that can be converted to cash. Absolute liquid assets are the most easily convertible to cash, such as cash in hand and at banks.

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74 views

Wasting Assets

A wasting asset is an asset that loses value over time through use, such as vehicles, machinery, mines, and quarries. Options contracts also lose their time value as they approach expiration. Assets classified as wasting may be treated differently for tax purposes by applying depreciation to account for the loss in value. Current assets include stocks, prepaid expenses, bills receivable, cash, and accrued incomes, while liquid assets also include short-term loans, advances, and investments that can be converted to cash. Absolute liquid assets are the most easily convertible to cash, such as cash in hand and at banks.

Uploaded by

Jann Vic Sales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Wasting asset

A wasting asset is an asset that irreversibly declines in value over time. This could include

vehicles and machinery, and in financial markets, options contracts which continually lose time

value after purchase.[14] Mines and quarries in use are wasting assets.[15] An asset classified as

wasting may be treated differently for tax and other purposes than one that does not lose value;

this may be accounted for by applying depreciation.

Comparison: current assets, liquid assets and absolute liquid assets

Current assets Liquid assets Absolute liquid assets

Stocks

Prepaid expenses

Bills receivable Bills receivable

Cash in hand Cash in hand Cash in hand

Cash at bank Cash at bank Cash at bank

Accrued incomes Accrued incomes Accrued incomes

Loans and advances (short Loans and advances (short Loans and advances (short

term) term) term)


Trade investments (short Trade investments (short Trade investments (short

term) term) term)

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