Legal ownership is not the only criterion that classifies something as an accounting asset; for example, someone purchases an item with the purchase of a loan, but does not become the owner of that item until the full purchase price has been paid. However, the item is still recorded as an asset together with the corresponding obligation. Likewise, although the lessee never becomes a property of the leased item, it may record that item as an asset provided that the relevant obligation is also disclosed.
In the field of accounting, "ownership" is usually an exception to "legal ownership"; an interest in or a right of assessment of a tangible or intangible asset, in combination with the right of ownership and the right of use, is an asset to the person concerned.
If a person is the value or economic advantage that comes from a specific source, that source is a means for the person concerned and he is the economic owner, though he may not be the legal owner. In this case, the accounting material should be most relevant in the legal form when determining the most appropriate accounting procedure.
The main function of accounting is to determine profits. However, revenue generation requires capital investment so that the enterprise can operate continuously and indefinitely.
Historically, costs that are not allocated over a period are deferred. They serve as accounting tools. If these costs can be recovered within one year, they are current assets and are recoverable for longer periods of intangible assets.
Asset classification is essential to determining profit and the nature of the assets' assets and liabilities in a given word, in other words. The goal of acquiring a tangible asset is to generate income. Can not be purchased for resale. Fixed assets should produce products that generate income or, in other words, be used in business.
From the accounting point of view, the largest category of fixed assets is tangible, for example buildings, machines and vehicles. Land for which depletion or depletion by use is not applicable as they are never consumed will also be regarded as a tangible asset. When assessing buildings, machines and vehicles, these assets are depreciated and amortized annually. Natural resources that are exhausted through use, such as mines, oil and gas wells and plantations, are also considered as tangible assets
The other set of assets is intangible assets, such as patents, copyrights, and goodwill. Accrued expenses and charges, such as the company's preliminary costs, are accounted for as intangible assets for accounting purposes.
Finally, the last tool known as an investment is called an external asset. These include fixed-income investments, investments in ordinary shares of other companies, other investments, such as pension funds, housing and insurance policies, and ultimately investment property