What is an asset document?

For many processes, both in business and in your personal life, you’ll require asset documents.

Asset documents are documents that detail relevant assets.

For example, if you’re applying for a mortgage, you may need to provide an asset document that lists everything contributing to your net worth (cash, savings, physical assets like jewelry and artwork, liquid assets like stocks and bonds, etc.). 

These assets will be weighed against the amount you want to borrow when lenders decide whether or not to approve your mortgage—and under what terms.

There are many types of asset documents and many situations in which they may be used. Here, we’ll take you through everything you need to know.

The importance of an asset document

Asset documents are essential in business and private dealings because they serve as a verification of assets.

This ensures that everyone concerned knows what you own, whether your assets are liquid or fixed, their net worth, nature, and so on. 

This is important because the nature of your assets and their documentation can have a big impact on important (even life-changing) decisions.

For example, asset documents can influence everything from mortgage lending to business negotiations and more.

Common types of asset documents

Asset documents are used in a variety of situations, including the following:

  • When being approved for a large loan, an asset document gives lenders an idea of if you can afford to pay it back and when.
  • When being approved for a mortgage, an asset document helps lenders decide the relative risk. The terms of your mortgage may depend heavily on what your asset document shows.
  • When shipping goods, asset documents act both as a record of net worth and proof of assets, which is important in the case of loss, theft, or damage.
  • When selling or merging a business, asset documents clarify the net worth of the business and the nature of its assets. This can make a big difference in negotiations.
  • When liquidating a business, asset documents show exactly what the business owns/has an interest in and how fast those assets can be turned into cash.

Understanding asset documentation

Several types of assets may be listed in an asset document, such as:

Current/liquid assets

These can be easily turned into cash (or cash equivalents) within a year.

Examples include cash, inventory, accounts receivable, and marketable securities.

Fixed assets

These cannot easily be converted into cash within a year.

Examples include patents, real estate, machinery, and longer-term investments.

Tangible assets

Tangible assets are physical things—things you can touch.

Examples include cash, office supplies, tools and equipment, furniture, and vehicles.

Intangible assets

Intangible assets have no physical presence.

Examples include brand reputation, trademarks, and research & development.

Operating assets

These are the assets that allow you to generate revenue. They may be intrinsically linked to intangible assets like your brand reputation.

For example, someone using your operating assets without your brand reputation would be unable to generate as much revenue.

Examples include equipment and tools, patents, inventory, and real estate.

Non-operating assets

These are assets you own but that don’t necessarily generate ongoing revenue for you.

Examples include short-term investments, unused equipment, and unused land.

Depending on what type of asset document you’re preparing, you may need to include one, some, or all of these types of assets.

You will notice there’s some overlap between asset types.

For example, certain operating assets may also be tangible/intangible assets.

If one of your assets belongs in more than one category, list it in both, but be sure to take this into account when totting up.

What is an asset statement?

An asset statement is similar to a balance sheet but with certain key differences. It’s typically used in business for tax purposes.

It details the assets owned by the business alongside liabilities like loans, debts, income taxes, and expenses accrued. 

The difference between an asset document and an asset statement

Asset statements and asset documents have certain key similarities.

Both are used to detail assets, and both can be used to determine the net worth of a company or individual.

However, asset documents are principally used to determine risk and net worth in negotiations with loan lenders, buyers, potential business partners, and so on. 

Asset statements, on the other hand, include negative assets such as debts and other liabilities.

They’re typically used to calculate net revenue for tax purposes.

In cases such as business purchases, asset statements may be more useful in judging the overall value or revenue of the business than asset documentation.

However, asset documents may also be requested for recording purposes.

Getting started with asset documents

Any asset documents must be kept secure.

You don’t want criminals combing through lists of what you own and how you make your money!

That’s why it’s vital to create and share your asset documents on a secure platform.

PandaDoc provides everything you need to build the perfect asset document.

From customizable templates to top-notch security features, PandaDoc is perfect for all your asset document needs.