What Is an Inventory Asset?

The bulb she is holding is an asset. So is her idea for a new product. Both add value to her company.

A ream of copier paper is an asset. So is the sheet-metal stamper at a Ford plant, a database of potential clients, or the patent for Viagra. What these very different items have in common is that they are used to some value by the companies that own them (Pfizer in the case of Viagra). Those assets are not always physical; a company may count its intellectual property and its software systems as assets.

Asset Inventory

Eric Teicholz in his "Facility Design and Management Handbook" wrote that an asset inventory may be as detailed or as general as a company wishes. The keys to look for are value of the information and how dynamic that information is. Taking an inventory of doorknobs is valueless -- that number remains fixed. The quantity or condition of raw materials and finished goods will change over time, thus, they should be included in an asset inventory. Other assets that are fairly dynamic are office supplies, fleet vehicles and production equipment.

Value

The United States Army defines an asset as something that provides value. "The value of an asset depends on its intended use and the amount of money that can be saved by using it," wrote the authors of "Taking Stock of the Army's Base Realignment and Closure Selection Process." Unused office space thus does not qualify as an asset, but a liability; it costs the Army, but, provides no value.

Information Assets

In the information age, information and intellectual property are assets. Consider such intangible assets as patents, software system designs and drug formulations.

The Information Systems Audit and Control Association (ISACA) describe two general types of information assets, being the information itself (software, tools and data); and information systems, which are physical assets like servers, computer workstations and mobile computing devices.

Elements

The asset inventory is far more than a simple list of stuff; it factors in the value of that stuff, as well as the responsibility for it. ISACA describes the features of a hardware asset inventory to include identification; value (both new and depreciated); location; owner, who is responsible for the asset; and such factors as security classification and general classification.

Purpose

Ultimately, an asset inventory may be used to assign a value to the entire enterprise; this is useful to a company for tax purposes, for estimating a value for acquisition or for venture capital. It is also fairly complex in the information age; consider that online giant eBay has absolutely no physical inventory of retail goods. Instead, it provides a virtual platform for sale of goods among its members.

References

• "Facility Design and Management Handbook"; Eric Teicholz; 2001
• "Taking Stock of the Army's Base Realignment and Closure Selection Process"; William Michael Hix, et. al.; 2001
• "CISA Certified Information Systems Auditor All-in-One Exam Guide"; Peter Gregory; 2009