Assets, liabliites and balance sheet

Assets

An asset is something that has value, or the power to earn money. These include :

• current assets : money in the bank, invenstments that can easily be turned into money, money that customers owe, stocks of goos that are going to be sold.
• fixed assets : equipment, machinery, buildings and land.
• intangible assets : things which you cannot see. For example, goodwill : a company’s good reputation with existing customers, adn brands : established brands have the power to earn money.

If a company is sold as a going concern, it has value as a profit-making operation, or one that could make a profit.

Words

goodwill /ˌɡʊdˈwɪl◂/ ★☆☆ n.

the value that a company has because it has a good relationship with its customers

The sale price also covers the goodwill of the business.

a going concern n.

a business which is making a profit and is expected to continue to do so

But you and I know the Soviet Union is a going conrern.

Depreciation

Joanna Cassidy is head of IT(Information Technology) in a publishing company :

‘Assets such as machinery and equipment lose value over time because they wear out, or are no longer up-to-date. This is called depreciation or amortization. For example, when we buy new computers, we depreciate them or amortize them over a very short period, usually three years, adn a charge for this is shown in the financial records : the value of the equipment is written down each year and written off completely at the end.

The value of an asset at any one time is its book value. This sin’t necessarily the amount that it could be sold for at that time. For example, land or buildings may be worth more than shown in the accounts, because they have increased in value. But computers could only be sold for less than book value.’

Wrods

depriciate /dɪˈpriːʃieɪt/ v.

vi. to decrease in value or price OPP appreciate

New cars depriciate in value quickly.

vt. to reduce the value of something over time, especially for tax purposes

Company computers are depriciated at 50% per year.

depriciation /dɪˌpriːʃiˈeɪʃən/ n.

[uncountable] a reduction in the value or price of something, usually for tangible assets

the depreciation of the dollar

amortize /əˈmɔːtaɪz $ ˈæmərtaɪz/ vt.

to pay a debt by making regular payments

Jaubert named a price and interest rate, assuming that the man would amortize the cost with a ten-year note.

amortization /əˌmɔːtaɪˈzeɪʃənˌæmərtə-/ n.

[countable, uncountable] hfen an asset is amortized, usually for intangible assets

The law provides for five-year amortization of the first $5 million of acquisition expenses.

charge /tʃɑːdʒ $ tʃɑːrdʒ/ ★★★ S1 W1 n.

[countable, uncountable] the amount of money you have to pay for goods or services

There is a charge for the use of the swimming pool.

write down phvt.

to reduce the value of an asset as shown in a company’s accounts

The giant hospital chain said it will write down about $100 million in assets and reserves.

book value n.

[countable] the value of a business after you sell all of its assets and pay all of its debts

Liabilities

Liabilities are a company’s debts to suppliers, lenders, the tax authorities, etc. Debts that have to be paid within a year are current liablilities, and those payable in more than a year are long-term liabilities, for example bank loans.

Words

liabilitiy /ˌlaɪəˈbɪləti/ ★☆☆ n.

[uncountable] legal reponsibility for something, especially for paying money that is owed, or for damage or injury

Tenants have legal liability for any damage they cause.

current liabilities n.

[plural] debts that must be paid within one year, for example to suppliers and the tax authorities

The company had long-term debt of $1.71 billion and current liabilities of $ 1.38 billion.

long-term liabilities n.

[plural] debts to be paid in more than one year, for example to lenders such as banks, rather than to suppliers

The company had long-term debts of $626 million, plus $311 million of other long-term liabilities, such as pension obligations.

Balance sheet

A company’s balance sheet gives a picture of its assets and liabilities at the end of a particular period, usually the 12-month period of its financial year. This is not necessarily January to December.

Words

balance sheet n.

[countable] a document showing a company’s financial position and wealth at a particular time, often the last day of the financial year

a healthy balance sheet

fianacial year n.

[singular] the 12-month period over which a company’s accounts are calculated SYN AmE fiscal year

However, in the first five months of the current financial year to 30 September 1992, it showed considerable improvement.

It is the end of this time : )