VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

1. 1.14
ASSETS

2. Video of this presentation at…
YouTube Channel for VCE Accounting

3. © Michael Allison. Author’s permission required for external use.
1.14 ASSETS
Assets
Liabilities
Owner’s Equity
Revenues
Elements of Accounting
Expenses

4. © Michael Allison. Author’s permission required for external use.
Assets
Definition:
An asset is:
1. A resource controlled by the entity
2. As a result of past events (transactions)
3. From which future economic benefits are expected to flow to the
entity
1.14 ASSETS

5. © Michael Allison. Author’s permission required for external use.
Assets
 Resources controlled by the
entity:
 The resource must be under the
control of the firm, i.e. the firm
decides how and when it is used
and not someone else
 E.g. Jack owns a small business –
his brother has lent him the use of
his delivery van to use in the
business, valued at $50,000
 Is this an Asset of the business?
1.14 ASSETS
$50,000
 No – the business does NOT
have an Asset
 The business (or Jack) does not
control the resource – the van
belongs to his brother
 The brother can make decisions
about the van – not the
business, e.g.
 Sell the van
 Put new tyres of the van

6. © Michael Allison. Author’s permission required for external use.
Assets
 Arises from past events – the asset comes about because of a
transaction the business engaged in in the past.
1.14 ASSETS
Business
Other
Party

7. © Michael Allison. Author’s permission required for external use.
Assets
 Will provide future economic benefits
 The resource must be capable of generating some sort of
economic gain for the firm in the future.
 There must be some sort of benefit that is yet to be received.
Business
Future
economic
benefit
1.14 ASSETS

8. © Michael Allison. Author’s permission required for external use.
Assets
 The future economic benefit provided by an asset can be cash…
 Example: a firm has a debtor owing $1,000
Business
Future
economic
benefit
When the debtor pays the
business, the economic
benefit flowing into the
business will be money…
1.14 ASSETS

9. © Michael Allison. Author’s permission required for external use.
Assets
 The future economic benefit provided by an asset is not always cash…
 Example: a firm has a delivery vehicle valued at $30,000
Business
Future
economic
benefit
The economic benefit
provided by the vehicle
will be the ability to make
deliveries to customers in
the future
1.14 ASSETS

10. © Michael Allison. Author’s permission required for external use.
Assets
 The future economic benefit provided by an asset is not always cash…
 Example: a firm prepaid $1,200 of insurance for 2015…
Business
Future
economic
benefit
The economic benefit
provided during the rest
of 2015 is insurance
protection in the event of
an emergency
Insurance
protection
1.14 ASSETS

11. © Michael Allison. Author’s permission required for external use.
9.9
251.5
454.0
61.8
25.9
174.8
14.3
30.3
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0
Cash Stock Land and
buildings
Plant and
equipment
Computer
equipment
Fixtures and
fittings
Computer
software
Goodwill
David Jones – Assets ($m)
1.14 ASSETS

12. © Michael Allison. Author’s permission required for external use.
TASK
In-class Homework
Cambridge Exercise 1.6 -
Assets X