What is the difference between Monetary and Nonmonetary Assets?

Men are in acquisition of several properties, on which values are or should be placed. There are several ways by which values can be calculated. Parts of the good ways to classify values are based on nonmonetary and monetary assets. Assets refer to any properties with economic value. The main difference between monetary and nonmonetary assets is the way they are classified. Monetary assets are usually tangible, while intangible assets can be classified under the nonmonetary assets. Examples of monetary assets, under which current assets are also classified, are cash, deposits in bank account, and short term investments.

Accounts receivable and checks receivable are also examples of monetary assets. Nonmonetary assets are of various forms, of which plants and equipment owned by a particular commercial industry are included. One's personal properties can also be classified under nonmonetary assets. Intangible assets, which are a kind of nonmonetary assets include copyrights, trade names, trademarks, goodwill, patents and franchises.

In financial accounting, an asset is any resource owned by the business. Assets represent the value of ownership that can be converted into Cash. The following are the significant differences between Monetary and Non-monetary Assets: a. Nature: Monetary assets are always tangible assets. Financial assets include Cash, short-term investments, deposits and bank accounts, investment accounts, accounts receivable, and low inventory. In contrast, Non-monetary assets can be different. The most commonly cited one is property, which can include plant and equipment for commercial companies and any personal property.

Other examples of Non-monetary assets include Intangible assets (patents, copyrights, trademarks, goodwill, and franchises), Associate and equity investments, Long-term inventory, and Biological assets. b. Liquidity: Liquidity refers to an asset’s ability to be sold rapidly and with minimal loss of value. Monetary assets are those assets that are liquid in nature because they are relatively easy to be sold while Non-monetary assets are those assets that are illiquid in nature because they are not readily saleable unless there is a drastic reduction in the price; hence, investors require a higher return on this kind of assets to compensate for the high cost of trading. c. Cash conversion: Monetary assets are easy to convert to a dollar value, while Non-monetary assets can be entirely subjective in their valuations.