Assets

Assets are one of the five financial statement elements, although our resources consider them in the broader sense of anything that’s valuable.

This is more helpful to students than starting with the definitions set out in the conceptual frameworks of the regulators.

The nature of assets

The elements of financial statements are the building blocks of financial statements. If your students understand what the elements are then they have a good basis for understanding how events are reported in financial statements. Those elements – assets, liabilities, equity, income and expenses – are key to understanding financial…Read more

Six young people sitting around a dining table

There’s no such thing as a prepayment

The battle to remove “prepayments” from accounting vocabulary is probably not winnable, but we can help our students by being clear about how we describe them.

Goodwill explained in three words

Goodwill represents those ‘unidentified flying assets’ that can’t be individually identified. Goodwill is one of those slippery concepts that accounting students can find confusing. Accounting for it brings the student in front of a number of difficult questions and misconceptions in accounting, such as the nature of an asset and the…Read more

Assets are rights

With gratitude to Paul Jennings for this clever idea. Some students find it difficult to appreciate that assets are rights, not things in and of themselves. I used to tell students that in the old days we put motor vehicles on balance sheets but they kept falling off. It didn’t…Read more