An asset is a useful and desirable thing or quality. The word is most often used in business, financial or accounting contexts. Canada has some of the world’s most impressive physical and natural resources. These resources may be viewed as “national assets.” The concept is also useful in personal finance, as housing is most Canadian families’ largest asset.
Business, Finance and Accounting
In a business context, an asset is a resource controlled by the entity (e.g., a person or company). For a resource to be an asset, the entity must be able to expect future economic benefits from it. When an entity buys equipment or another company, for example, it gains an asset.
For accounting purposes, an asset results from a past transaction with a knowable cash value. The cash values of assets commonly appear on the left side of companies’ balance sheets. Balance sheets are typically structured using the equation:
Assets = Liabilities (or Debts) + Owners Equity (or Capital).
See also Debt in Canada; Capital in Canada.
Tangible and Intangible Assets
People often think of assets as tangible things like a lawnmower or a robot. However, many assets in today’s information economy are intangible, such as patents, drilling rights, or the name of a beer or sports team. (See also Information Society.)
The International Federation of Reporting Standards defines an intangible asset as an identifiable non-monetary asset without physical substance. Such an asset is identifiable when it is separable (i.e., it can be sold, transferred or licensed), or when it arises from contractual or other legal rights.
An organization’s human capital (its employees) can also be also an important asset.
Canada is one of the world’s top beneficiaries of both tangible and intangible assets. According to the Allianz Global Wealth Report 2020, Canadians owned roughly CAN$150,000 per capita in financial assets in 2019. This ranked the country 9th, just behind Denmark.
However, those numbers vastly understate Canada’s wealth, because of the intangible nature of many of its assets. For example, Canada’s rich and varied natural resources include vast stores of fresh water and relatively clean air. Neither of these is quantifiable using standard methods.