ASSET

asset. 1. An item that is owned and has value. 2. (pl.) The entries on a balance sheet showing
the items of property owned, including cash, inventory, equipment, real estate, accounts receivable,
and goodwill. 3. (pl.) All the property of a person (esp. a bankrupt or deceased person) available
for paying debts or for distribution.
accrued asset. An asset arising from revenues earned but not yet due.
admitted asset. An asset that by law may be included in evaluating the financial condition of
an insurance company. Cf. nonadmitted asset. [Cases: Insurance 1363. C.J.S. Insurance 168.]
appointive asset. An asset distributed under a power of appointment.
assets by descent. The portion of an estate that passes to an heir and is sufficient to charge the
heir with the decedent's specialty debts. Also termed assets per descent.
assets in hand. The portion of an estate held by an executor or administrator for the payment
of debts chargeable to the executor or administrator. Also termed assets entre main; assets entre
mains.
assets per descent. See assets by descent.
asset under management. A securities portfolio for which an investment adviser provides
ongoing, regular supervisory or management services.
capital asset. 1. A long-term asset used in the operation of a business or used to produce
goods or services, such as equipment, land, or an industrial plant. Also termed fixed asset. 2.
For income-tax purposes, any of most assets held by a taxpayer except those assets specifically
excluded by the Internal Revenue Code. Excluded from the definition are, among other things,
stock in trade, inventory, and property held by the taxpayer primarily for sale to customers in the
ordinary course of trade or business. [Cases: Internal Revenue 3230.13261. C.J.S. Internal
Revenue 127145, 490491, 671.]
commercial assets. The aggregate of available property, stock in trade, cash, and other assets
belonging to a merchant.
current asset. An asset that is readily convertible into cash, such as a marketable security, a
note, or an account receivable. Also termed liquid asset; quick asset; near money; financial
asset.
Current assets are assets expected to be converted to cash, sold, or consumed during the next
twelve months, or within the business's normal operating cycle if the cycle is longer than a year.
The operating cycle is the period from the time that cash is used to acquire goods and services,
these goods and services are sold to customers, and the accounts receivable from these customers
are collected in cash. For a small retail store, the operating cycle may be only a few weeks or
months. For a shipbuilding company, however, the normal operating cycle could run several
years. Jay Alix & Elmer E. Heupel, Financial Handbook for Bankruptcy Professionals 9.2, at
354 (1991).
dead asset. A worthless asset that has no realizable value, such as an uncollectible account
receivable.

earning asset.(usu. pl.) An asset (esp. of a bank) on which interest is received. Banks
consider loans to be earning assets.
equitable asset. An asset that is subject to payment only in a court of equity.
financial asset.See current asset.
fixed asset.See capital asset (1).
frozen asset.An asset that is difficult to convert into cash because of court order or other legal
process.
hard asset.See real asset.
hidden asset.An asset carried on the books at a substantially reduced or understated value that
is considerably less than market value.
illiquid asset.An asset that is not readily convertible into cash, usu. because of (1) the lack of
demand, (2) the absence of an established market, or (3) the substantial cost or time required for
liquidation (such as for real property, even when it is desirable).
individual asset.(usu. pl.) Property belonging to a member of a partnership as personal
property, apart from the firm's property. [Cases: Partnership 67. C.J.S. Partnership 7072.]

intangible asset. Any nonphysical asset or resource that can be amortized or

converted to cash, such as patents, goodwill, and computer programs, or a
right to something, such as services paid for in advance.
legal asset.A decedent's asset that by law is subject to the claims of creditors or legacies.
Also termed probate asset. [Cases: Executors and Administrators 38. C.J.S. Executors and
Administrators 2, 121, 130.]
liquid asset.See current asset.
mass asset.An intangible asset, such as a dominant market position, that is made up of several
components but that is considered a single entity for purposes of depreciation, because the loss of
any component of the asset is replaced by new components, so that the whole asset has little or no
fluctuation in value. An entity with a dominant market position might lose a vendor but, because
of its dominant market position, still be able to replace the loss with a new vendor. The market
position is therefore considered a mass asset.
net assets.See net worth under WORTH.
net quick assets.The excess of quick assets less current liabilities. See QUICK-ASSET
RATIO.
new asset.Wills & estates. In the administration of a decedent's estate, property that the
administrator or executor receives after the time has expired to file claims against the estate.
nominal asset.An asset whose value is difficult to assess, such as a judgment or claim.
nonadmitted asset.An asset that by law may not be included in evaluating the financial
condition of an insurance company because it cannot be converted quickly into cash without a
financial loss. Cf. admitted asset. [Cases: Insurance 1363. C.J.S. Insurance 168.]
nonprobate asset.Property that passes to a named beneficiary upon the owner's death
according to the terms of some contract or arrangement other than a will. Such an asset is not a
part of the probate estate and is not ordinarily subject to the probate court's jurisdiction (and fees),
though it is part of the taxable estate. Examples include life-insurance contracts, joint property
arrangements with right of survivorship, pay-on-death bank ac-counts, and inter vivos trusts.
Also termed nonprobate property. Cf. WILL SUBSTITUTE.
personal asset.An asset in the form of money or chattels.
premarital asset.Property that a spouse owned before marrying. In most jurisdictions, this is
part of the spouse's separate property. See SEPARATE PROPERTY. Cf. COMMUNITY
PROPERTY.
probate asset.See legal asset.

quick asset. 1. Cash and other current assets other than inventory. 2. See current asset.
real asset. 1. An asset in the form of land. 2. Loosely, any tangible asset. Also termed hard
asset.

tangible asset. An asset that has a physical existence and is capable of being assigned a value.
wasting asset. An asset exhausted through use or the loss of value, such as an oil well or a
coal deposit.
ASSET ACQUISITION
asset acquisition. Acquisition of a corporation by purchasing all its assets directly from the
corporation itself, rather than by purchasing shares from its shareholders. Also termed asset
purchase. Cf. SHARE ACQUISI-TION.
ASSET ALLOCATION
asset allocation.The spreading of funds between different types of investments with the
intention of decreasing risk and increasing return.
ASSET-BACKED SECURITY
asset-backed security. See SECURITY.
ASSET-BASED FINANCING
asset-based financing. See FINANCING.
ASSET-COVERAGE TEST
asset-coverage test. Accounting. A bond-indenture restriction that permits additional
borrowing only if the ratio of assets (typically net tangible assets) to debt (typically long-term debt)
does not fall below a specified minimum.
ASSET-DEPRECIATION RANGE
asset-depreciation range. Tax. The IRS's range of depreciation lifetimes allowed for assets
placed in service between 1970 and 1980 and for assets depreciated under the Modified
Accelerated Cost Recovery System under the Tax Reform Act of 1986. Abbr. ADR. See
ACCELERATED COST RECOVERY SYSTEM. [Cases: Internal Revenue 3476. C.J.S. Internal
Revenue 230, 234, 239, 249.]
ASSET DIVIDEND
asset dividend.See DIVIDEND.

ASSETSENTRE MAIN
assets entre main.See assets in hand under ASSET.

ASSET-PROTECTION TRUST
asset-protection trust.See self-settled trust under
TRUST.

ASSETS IN HAND
assets in hand.See ASSET.

ASSET PURCHASE
asset purchase.See ASSET ACQUISITION.
ASSETS BY DESCENT
assets by descent.See ASSET.

ASSETS PER DESCENT

assets per descent.See assets by descent under
ASSET.
ASSET UNDER MANAGEMENT
asset under management.See ASSET.
ASSET VALUE

asset value.See NET ASSET VALUE