Redundant Asset

A redundant asset is a type of asset that generates some income for the company but it is not linked directly to the everyday operations of a company.

Example OF Redundant Asset

Another name that is given to the redundant asset is the non-operating assets. This name is given to the redundant assets due to the fact that they are not an integral part of the operating activities of a company.

The example of a redundant asset can be given as an example of a company XYZ who was used to make plastic model kits as their core product. Later the company moves to manufacture plush dolls for kids. Now the dye they used to manufacture plastic model kits was no longer of any use for the company in making plush dolls. This means that dye becomes the non operative asset of the company as it is now not being used in the daily operations of the company.

Importance of Redundant Assets

The companies have to report all of their redundant assets on the balance sheet in order to present their full and transparent financial picture. However these assets are not included in the growth and revenue projections for the future.

Other Related Accounting Articles:

• Liquid Asset
• Pooling of Interest
• Accounting Valuation Process
• Headline Earnings
• Absolute Interest
• Affect of Assets and Liabilities on Business Cash Flow
• Overcapitalization
• Absolute Performance Standard
• Operating Income before Depreciation and Amortization OIBDA
• Relationship between Account Receivables and External Balance Sheet