Legal ownership is not the only criterion for classifying something in accounting terms as an asset; for example, someone buys an item on installments but does not become the owner of that item until the full purchase price has been paid. However, the item is still recorded as an asset together with the corresponding obligation. Likewise, although a lessee never becomes the owner of the leased property, he can record that property as an asset provided that the corresponding obligation is also manifested.

In an accounting sense, ‘ownership’ generally implies ‘legal ownership’, but there are exceptions; an interest in a tangible or intangible object, or a right of value, combined with the right of possession and the right of use also constitutes an asset for the interested party.

If a person owns the value or economic benefit from a particular source, then that source is an asset to the person concerned and he or she is the economic owner, even if he or she is not the legal owner. In such a case, the accounting substance should prevail over the legal form to determine the most appropriate accounting procedure.

The main function of accounting is to determine profits. Generating income, however, requires a capital investment to provide the facilities a business needs to operate continuously and indefinitely.

Historically, expenses that are incurred by not being allocated as a cost during a period are deferred costs. From an accounting point of view, they represent an asset. If these costs can be recovered within a year, they are current assets and if they are recoverable over a longer period, they are fixed assets.

This classification of assets is essential to determine profits and also to show the position of the company at a given time, that is, the composition of its assets and the nature of its obligations. The purpose of acquiring fixed assets is to use them to generate income. They are not purchased for resale purposes. Fixed assets must produce goods that generate income, that is, they must be used in the operations of the business.

The largest category of fixed assets in accounting terms is tangible, such as buildings, machinery, and vehicles. Land that is not subject to depreciation or depletion through use, as it is never ‘consumed’ is also considered a tangible fixed asset. When evaluating buildings, machinery and vehicles, these assets are subject to depreciation that must be contributed annually as cost. Tangible fixed assets are also considered natural resources that, due to their use, are also subject to depletion, such as mines, oil and gas wells and plantations.

Another group of assets are intangible fixed assets such as patents, copyrights, trademarks, and goodwill. Deferred expenses and debits such as the preliminary expenses of a company are also considered in accounting terms as intangible fixed assets.

Finally, the last to be considered as an asset are external assets, also known as investments. These include fixed-term investments that generate a fixed income, investments in ordinary shares of other companies, various investments such as pension funds, housing plans and insurance policies, and finally, investment properties.