What is Fictitious Assets | features and related questions

What is Fictitious Assets | features and related questions

You must here about fictitious assets and you must have the questions what are the fictitious assets and for what they are used in a business to start what is fictitious assets, first we need to know what is assets ?

What is Assets ?

Assets are anything of value that a company has, including money, property, equipment, and goodwill.

For example, assets include: Cash in the bank, land, building etc.

Stock of merchandise held by a department store on consignment. Stock valued at $1,000 is recorded as an asset at that amount – even though it may not yet be sold or shown to earn revenue.

The stock will never generate income until released from this inventory position and returned to its owner or some other party who wants the product (for example, when paid for by someone purchasing it).

Goodwill value associated with business acquisitions or mergers: Each key employee represented valuable knowledge and skills acquired through deep experience; therefore, their professional value exceeded.

What is Fictitious Assets

The concept of Fictitious Assets was first introduced by Professor Albert Ando, who was an American.

Fictitious assets are assets that do not exist in the real world. They are often used in financial planning and investment to help people make decisions.

Fictitious assets are any assets that are not real. This could be anything from stocks to bonds to property.

When you start a business, you will need to determine the value of your fictitious assets. You will also need to keep track of how much money is being spent on these assets and make sure that they are properly accounted for in your financial statements.

It is important to be aware of the tax implications of having fictitious assets in your business. If you are using these assets to generate income, then you may have to pay taxes on them at both the corporate and individual levels.

Finally, it is important to make sure that your fictitious assets are not a liability to your business. If they become too expensive to maintain or if they lose value, then your business could go bankrupt.

Some common examples of fictitious assets include:

1. Bonds: Bonds are a type of debt that represents an agreement between two parties to pay back a fixed amount of money at a specific time in the future.

2. Stock : Stock is a type of ownership stake in a company or organization. When you buy stock, you are investing in the company’s future by giving up the right to receive dividends (money paid out by the company as rewards for your investment) but also have the right to sell your stock at any time for a profit.

3. Real estate : Real estate is an asset that can provide you with long-term income, protection from inflation, and tax benefits. It is important to remember that real estate is not immune to market fluctuations and may lose value over time.

What is Fictitious Assets | features and related questions

Features of Fictitious Assets

Fictitious assets are not liabilities and do not affect the financial position of the company. They have no impact on the profit or loss account either.

Fictitious assets are inextricably linked to other accounting issues, like goodwill, intangible

Fictitious assets are normally created for the purpose of making a profit in some way.

They can be used to earn interest, dividends or other benefits, and they can also be used to reduce tax liability. In this case, it is important that

Is goodwill a fictitious asset?

Goodwill is not a fictitious asset. goodwill is an intangible asset that represents the value of customer relationships and customer investments in a company.

When a business acquires another business, it often values the acquired company’s goodwill at its market value. This means that goodwill represents the cost of acquiring a company, rather than simply the purchase price.

The main benefits of having good will are:

• It helps companies attract and retain customers.

• It allows companies to expand their businesses more easily by buying other companies.

• It can make it easier to merge or acquisition with other companies because there is less resistance to changes in ownership.

The major difference between fictitious assets and fixed assets is that fixed assets are physical properties of a company, whereas the fictitious ones are not.

For example, if a company has an office building in its name, it is considered as a fixed

Also read : – 4 P’s of Markeitng

Q1. Does Fictitious assets realize cash when sold?

When the Fictitious assets are sold, it is realized as cash.

Q2. Does Fictitious assets realize capital gain?

No, It does not realize any capital gain.

Difference between fictitious assets and intangible assets

Fictitious assets are those that have no real world value, such as stocks and bonds. Intangible assets are anything that has some measure of value but cannot be seen or touched, such as trademarks and trade secrets.

In addition, fictitious intangible assets have a different rate of return. This can help the company receive funds, obtain work-out values or provide funding for purchases and investments that are necessary to its business situation.

Intangible assets are those that cannot be seen, touched or measured. They are unique and special in nature. These assets can be physical or non-physical. Fictitious assets on the other hand, have no tangible existence and exist only on paper.

What is Fictitious Assets | features and related questions

In addition, the value of fictitious assets is not subject to many government restrictions. This can help a company get funding from the U.S Federal Reserve or other banks, which often require investors to comply with specific capital gains as well as profit shares on sales and charges in some cases; all these requirements may be unnecessary for fictional assets that don’t have any actual real-world value,

since they are not considered investments or securities even if their values are realized in cash such as securities affected by federal laws (such as stocks traded on stock exchanges), mutual funds whose income distribution depends largely upon long-term growth.

Also Read : – What is RCM Business

What is a liquid asset?

A liquid asset is an investment that can be easily converted into cash. This means that it has low risk and is usually a good choice for people who want to invest money but don’t want to worry about the long-term stability of their investment.

Some examples of liquid assets are stocks, bonds, and mutual funds.

Does Fixed Assets and Fictitious assets are one and the same?


Fixed assets are all tangible assets which have physical existence and can be measured in monetary terms. Whereas, Fictitious Assets are intangible assets (goodwill) which does not have any physical existence and cannot be measured in monetary terms.

1. Assets = Liabilities + Equity

2. Assets = Money in the bank + tangible or intangible assets

3. Assets = Value of inventory + value of fixed assets

4. Liabilities = Debts, loans and mortgages – cash

Fictitious expenses are expenses which arise from the operation of a business and are not required to be paid during the accounting period in which they arose. In other words, fictitious expenses remain within an entity’s current or non-current assets because they do not correlate with any actual cash outflows into these resources.


The Fictitious assets are only shown in the balance sheet of the company and not written off. The balance sheet shows these expenses or losses which have been spread over more than one years, as a part of total assets of the company.

The Fictitious assets are an accounting method to describe unpaid expenses and losses which arise from operating activities. The rate of collection cannot be measured against accounts receivable as they do not belong to current liabilities section, it will only show up on profit & loss statement.

Leave a Comment

Your email address will not be published. Required fields are marked *

%d bloggers like this: