What is ‘Wasting Asset’
An item that irreversibly declines in value, as a function of time. Wasting assets include vehicles, machinery and other fixed assets. Accountants attempt to quantify the amount that assets decrease in value over time, by assigning depreciation schedules to wasting assets, therefore, recognizing the decrease in value each year.
Explaining ‘Wasting Asset’
In investing, options are the most common type of wasting asset. An option’s value has two components: a time value and an intrinsic value. As the option’s expiration date nears, the time value of the option gradually declines to zero. At expiration, an option is worth only its intrinsic value. Nonetheless, wasting assets are usually of a physical nature and experience price erosions as time passes.
Further Reading
- The Pentagon's Wasting Assets-The Eroding Foundations of American Power – heinonline.org [PDF]
- From perpetual to wasting asset: A time for paradigm shift? – www.ingentaconnect.com [PDF]
- From perpetual to wasting asset – www.emerald.com [PDF]
- Wasting assets: natural – books.google.com [PDF]
- The Role of the Petroleum Engineer in the Project Financing Team – www.onepetro.org [PDF]
- 'Climate value at risk'of global financial assets – www.nature.com [PDF]
- Accounting for" wasting assets": measurements of income and dependency in oil-rentier states – www.jstor.org [PDF]
