The value people produce is an asset. After all, you don't own people, you buy their effort.
A contract can be an asset. Usually the unrealized future value of the agreement has value should you need to make a deemed disposition (or have some other valuation event). It gets very obviously complicated and fuzzy though, which is where accountants make the big bucks. It's pretty rare that a company chooses to make a contract valuable, but it often comes up in bankruptcy proceedings.
As an example of contracts having value, a few years ago I was involved in the acquisition of some media distribution assets, and one such asset was a transferable "MFN" contract with a major publisher. That was a very, very valuable asset.
A contract for a typical SaaS company, billed annually, is actually a liability (from an accounting perspective) up until the point where the contract has been completely fulfilled.
Others (say, an investor) might view a contract as an “asset” because of the future value it might bring, but not in a traditional accounting sense.
That seems like a very broad way of classifying assets.
Are people assets? Certainly not on the balance sheet I hope.
What about a contract? Is a contract an asset? I’m actually curious, not trying to be a smart ass.
The value people produce is an asset. After all, you don't own people, you buy their effort.
A contract can be an asset. Usually the unrealized future value of the agreement has value should you need to make a deemed disposition (or have some other valuation event). It gets very obviously complicated and fuzzy though, which is where accountants make the big bucks. It's pretty rare that a company chooses to make a contract valuable, but it often comes up in bankruptcy proceedings.
As an example of contracts having value, a few years ago I was involved in the acquisition of some media distribution assets, and one such asset was a transferable "MFN" contract with a major publisher. That was a very, very valuable asset.
Another instance of contracts having value: bonds and options are just contracts, and it would be insane to consider a bond to not be an asset.
A contract for a typical SaaS company, billed annually, is actually a liability (from an accounting perspective) up until the point where the contract has been completely fulfilled.
Others (say, an investor) might view a contract as an “asset” because of the future value it might bring, but not in a traditional accounting sense.