What is a paper asset?

and Paper Asset is any type of asset that is done in the balance sheet but cannot be quickly or easily converted to cash. Companies often have a number of paper assets in their books, sometimes in the form of parts and equipment that are no longer applicable but have not yet been charged from accounting records. There are accounting procedures that allow you to gradually remove assets of this type from books, either by writing out obsolete equipment or selling real estate for the value of rescue. Depending on the tax laws that apply in the jurisdiction in which the company is located, this process may lead to a tax relief that can be used to reduce taxes owed for the period in which the sale is carried out.

The low liquidity of the paper asset, whether for obsolescence or the fact that there is no market with this asset, means that the company basically pays taxes that do not provide any advantage of any kind. For this reason it is not unusual society have themWhat type of process that allows you to announce the asset of obsolete and remove it from its financial records. In large corporations, this process is usually created at plant level and handed over to the office of the administrator at the company headquarters.

The controller then determines whether the asset could be useful in another place of the company. If so, measures are taken to transfer paper asset to a new location and removal from the accounting records of the race, which is trying to ensure that the device be announced. If the asset could not be used for the company in any of its locations and it is determined that the item cannot be sold, the inspector often grants an application for obsolescence and approves both the removal of the asset from the accounting records and the transport of the outdated equipment to the landfill or the other.

Because paper asset already has no value for the owner, this asset does not generate benefits that help balance the taxes that JSou evaluated on the item from one year to another. In order to reduce the tax burden and save money from the company, it usually evaluates parts and equipment every year to determine whether there is a reason to leave these assets for the next year. By declaring a paper asset in accordance with government laws and regulations relevant to the type of asset, the Company may dispose of the asset and already in its accounting records bears the accounting value of this asset. The final result is less taxes due and more money kept by companies for use in projects, such as product development or upgrading for equipment that remains important for business operations.