Treatment of Expenditures as Assets

Treatment of Expenditures as Assets

Introduction

Every organization is incomplete without assets. There are different kinds of assets which are required for any organization. All such assets are simply described as the resources with the help of which a company produces something of worth, most of the people simple term assets as tangible assets as well. Apart from assets a company also spends for different operations. These are known as expenses and expenditures. These particular expenditures are spent on the company's account, so that a company can later earn income on the basis of this particular expenditure.

Different accounting policies will be discussed to make things easier to understand and to propose a framework where expenditure will be treated as asset.

Discussion

Expenditure as an Asset

For numerous individuals it is very difficult to answer at which particular places and scenarios expenditure can be treated as an asset. There are different answers and logics to that but the most appropriate one tells that the expenses which are used to increase the income of the company are known as expenditures. On the contrary, Capital expenditures are those with the help of which an organization boosts its income and therefore are known as fixed assets.

This way expenditure can be treated as an asset easily. There is no need to involve different theories as this the best way to describe their interchangeable roles in the financial scenario. There are also times when research and development departments need a lot of expenses and as they are in need of expenses they can be termed as assets because of the future growth which a business can enjoy on the basis of the R&D. There are also invisible assets which are an organization's actual competitive strength (Roehl T. W., 1991).

Conceptual Framework

For any company the department of research ...