Monetary asset definition
/What is a Monetary Asset?
A monetary asset is an asset whose value is stated in or convertible into a fixed amount of cash. Thus, $50,000 of cash now will still be considered $50,000 of cash one year from now. In an inflationary environment, monetary assets will decline in value, unless they are invested in interest-bearing or appreciating assets that provide returns matching or exceeding the rate of inflation .
Presentation of Monetary Assets
All monetary assets are considered to be current assets , and are reported as such on a company's balance sheet . In essence, if an asset is classified as a long-term asset, then it cannot be a monetary asset.
Examples of Monetary Assets
Examples of monetary assets are cash, investments, accounts receivable , and notes receivable. The term can be more tightly defined to exclude any assets that cannot be readily converted into cash (such as long-term investments or notes receivable).
Longer-term assets such as fixed assets are not considered to be monetary assets, since their values decline over time.