An asset is any resource owned by a business or an economic entity. Anything that can be owned or controlled to produce value and that is held by an economic entity and that could produce positive economic value is considered an asset.
For companies, assets are things of value that sustain production and growth. For a business, assets can include machines, property, raw materials and inventory - as well as intangibles such as patents, royalties, and other intellectual property. The balance sheet lists a company's assets and shows how those assets are financed. The balance sheet provides a snapshot of how well a company's management is using its resources. There are two types of assets on a typical balance sheet.
Current Assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. Current assets are expected to be liquidated within one fiscal year or one operating cycle.
Fixed assets are non-current assets that a company uses in its production or goods, and services that have a life of more than one year. Fixed assets are recorded on the balance sheet and listed as property, plant, and equipment (PP&E). Fixed assets are long-term assets and are referred to as tangible assets, meaning they can be physically touched.