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What is an asset? I like to explain assets as something that the company owns and from which the company will benefit in the future and assets result from past transactions. This is the same as the technical definition of assets: "Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions". Assets in the balance sheet of a company's financial statements are valued at market value or net realizable value or historical cost or amortized cost and in other ways. For example, Held to maturity marketable securities are reported at amortized cost, Short term investments at market value, Accounts receivable at net realizable value, PPE at historical cost net of accumulated depreciation, inventory at lower of cost or market. Available for sale investments are carries at estimated fair value with any unrealized gains and losses net of taxes included in accumulated other comprehensive income or loss in stockholders equity... read more

Depreciation expense for a manufacturing company is allocated between COGS and operating expense based on the source of this expense. For a manufacturing company, depreciation on the manufacturing equipment and facilities is a manufacturing overhead and thus included in COGS. Whereas depreciation on non-manufacturing equipment is included in operating expenses. It is interesting to note how various companies in the Internet Publishing and Broadcasting and Web Search Portals (NAICS 519130) are treating depreciation expenses and what is the reason behind this. Facebook, Linkedin and Google are all under the same NAICS as mentioned above. Facebook and Google include depreciation associated with operation of data centers and amortization of intangible assets in cost of revenues whereas Linkedin reports D&A separately on the income statement. Since maintaining data center equipment and technology infrastructure is directly related to delivery and distribution of products and... read more

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