A Balance Sheet indicates the financial strength of the company at a given point of time. It is a snap-shot of what a company owns and owes. i.e., it gives the details of the ‘Assets’ and ‘Liabilities’.   The following section describes the important elements of the Balance Sheet.

Assets are resources which are expected to provide a firm with future economic benefits. An item can be recognized as an asset if the firm has acquired rights over it or can quantify future economic benefits that can be derived from that item with a fair degree of accuracy.

Non-Current Assets: These are assets which are expected to produce benefits for more than a year. These are classified as tangible and intangible assets. Tangible non-current assets include land, building, plants and machinery and are reported at net book value (Cost price less accumulated depreciation). Intangible non-current assets include items such as patents, copyrights, trademarks and goodwill and are also reported at net book value, (Gross value less accumulated amortization). Amortization is the allocation of the cost of the intangible asset over the accounting period that benefits from its use.

Investments: These are generally made up of financial securities like, shares and debentures of other companies, most of which are likely to be associate and subsidiary companies. These investments are made primarily to generate income from idle cash. Investments made for short-term purposes are recorded under current assets and are carried at cost or market value, whichever is lower. Long-term investments are valued at cost less any decreases in value which is regarded as permanent.