Prepaid Expense

  

Categories: Accounting

Rent. A 3-year lease. Your landlord made you pre-pay it 3 years in advance to the tune of 2 grand a month, because she was worried you would end up being a deadbeat and abscond with unpaid rent money when you disappeared in the night. So you paid 36 months' worth of rent up front, for 72 grand total. It was a prepaid expense you would hold on your balance sheet as an asset, which would be amortized away, 6 grand a quarter for 3 years, until it held a zero balance and was fully paid off.

When you're the one pre-paying an expense, it's an asset. Nice to have if you can make the value propositions work out.

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Finance: What is a Hard Asset?12 Views

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Finance allah shmoop What is Ah hard asset Yeah It

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takes a lot of hard work to get an asset

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like that Okay So hard asset is just one that

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you can bang on touch Engage with cell Alright examples

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Oil it's Hard asset gold Hard of vintage nineteen Fifty

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seven Ferrari with beige leather interior hard four thousand head

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of longhorn cattle in texas A commercial building in the

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best part of town All of these arm or less

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commodities Hard assets Well okay Okay The categories Rare cars

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art coins stamps stuff like that that's where they fit

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So what do you care if something is ah hard

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asset or a soft one Well most or all hard

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assets are commodities and they generally do very well in

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periods of very high inflation when you know stocks were

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getting crushed And yeah the feds raising rates appoint a

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quarter now forever Well equities and bonds will get crushed

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Commodities well generally keep up with the spike in prices

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causing the fed raised rates in the first place So

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they're a good hedge for most investment portfolios And not

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all of them are great forever like check out riel

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not a good run Most not all do well though

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an oil will likely have its day in the sun

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again At some point you lan When in doubt remember

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what kim kardashian and warren buffett said A good asset

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is hard to find and a hard asset is good

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