[mrcode007]

Utility is not an asset. When you grow up with your parents they provide shelter, you get a utility of it. No asset for you. Majority of assets produce cash flow (e.g. licensing software - IP asset, renting real estate to someone - you get monthly rent, bond - coupon payments, stock - you get dividends, etc)

[throwaway1105q]

Assets don't have to produce any cash flow. Most popularly, gold. Stocks that provide stable dividends are also less and less usual.

Assets can just hold their real value compared to inflation and that's useful enough - even losing value slower than inflation is still good.

[mrcode007]

FASB defines an asset as:

“A present right of an entity to an economic benefit”.

“Essential to the definition of an asset is a right to an "economic benefit" —the capacity to provide services or benefits to the entities that use them. Generally, in a business entity, that economic benefit eventually results in potential net cash inflows to the entity. In a not-for-profit entity, that economic benefit is used to provide desired or needed goods or services to beneficiaries or other constituents, which may or may not directly result in net cash inflows to the entity.“

It also says “incurring a cost to acquire an item does not in itself qualify an item to meet the definition of the asset”

https://www.fasb.org/Page/ShowPdf?path=Concepts_Statement_8-...

[throwaway1105q]

Not sure how is an accounting book relevant. I'd rather ask a tax consultant - the definitions are slightly but significantly different.

Anyways, even by your book's definition - later sale for a higher price is economic benefit, protection against inflation is one too.

This link considers your viewpoint too: https://www.investopedia.com/terms/a/asset.asp

[mrcode007]

I’m trying to say that under mortgage, a property isn’t your asset. It’s a bank’s asset. The mortgage is booked under asset side on the balance sheet of the bank. It cannot be booked as an asset on your side. The economy wouldn’t balance. Until you actually paid off stuff the home is a liability. You pay money on it every month (negative cash flow) and that cash flow accrues to the bank (positive cash flow). I don’t know in what definition an asset produces a negative cash flow. It’s a liability under most definitions. Maybe I’m wrong. I’m not an accountant.

[jjav]

> I’m trying to say that under mortgage, a property isn’t your asset. It’s a bank’s asset.

No, the property is your asset. The mortgage is your liability. Each month as you pay the mortgage you have an expense (the interest part of the mortgage) and a reduction in your liability.

[throwaway1105q]

The loan is a liability (and an asset on the bank's side) but the house itself is your asset and is treated as such. You pay capital gains tax on sold assets even if you used a loan to obtain them. For individuals there are exceptions to that specific to real estate, but corporations definitely do. It's not an asset only if it's actually owned by the bank - such as a car or machine on leasing.

I'm not an accountant either but my company has some assets we paid for with a loan, so this is a situation I know.

[s1artibartfast]

I think you have a very skewed perspective of assets, let alone physical assets (which housing is).

A store that owns its own real estate isnt generating cashflow with it. This is the equivalent to a Homeowner living in a home.

If you are deadset on using intangible assets, it is the same a company holding a drug patent and producing the drug. Cashflow comes from sales, not the patent.