Monetary asset definition
/What is a Monetary Asset?
A monetary asset is an asset whose value is stated in or convertible into a fixed amount of cash. Thus, $50,000 of cash now will still be considered $50,000 of cash one year from now. In an inflationary environment, monetary assets will decline in value, unless they are invested in interest-bearing or appreciating assets that provide returns matching or exceeding the rate of inflation.
Presentation of Monetary Assets
All monetary assets are considered to be current assets, and are reported as such on a company's balance sheet. In essence, if an asset is classified as a long-term asset, then it cannot be a monetary asset.
Examples of Monetary Assets
Examples of monetary assets are cash, investments, accounts receivable, and notes receivable. The term can be more tightly defined to exclude any assets that cannot be readily converted into cash (such as long-term investments or notes receivable).
Longer-term assets such as fixed assets are not considered to be monetary assets, since their values decline over time.