What is ‘Earning Assets’
Earning assets are income-producing investments that are owned, or held, by a business, institution or individual. These assets also have a base value, but have the ability to produce additional funds, beyond this inherent value, for the investment holder. This allows the investment holder to maintain the assets as a source of earnings, or sell the assets for a lump sum based on the inherent value.
Explaining ‘Earning Assets’
Earning assets include stocks, bonds, income from rental property, certificates of deposit (CDs) and other interest or dividend earning accounts or instruments. They can provide a steady income, making them especially attuned to long-term goals such as retirement planning. Earning assets are a reflection of only part of the total assets of an individual or institution.
Maintenance on Earning Assets
Some earning assets, such as certificates of deposit, require no additional effort once the initial investment is made. Income is produced through interest or dividend payments and are a part of the essential design of the particular investment type. These investments require little to no maintenance, and generally do not require any additional investment on the part of the investment holder.
Earning Assets and Tax Obligation
Income from earning assets must be reported on the appropriate tax filings. In the case of income generated by various securities, the investing institutions send yearly statements for tax reporting purposes that include the total amount of interest and/or dividends earned. Income from rental properties must also be declared.
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