Dictionary / Admissible Asset
What does Admissible Asset mean in accounting?
Quick definition
Tax & complianceAn asset which, under provisions and regulations of former excess-profits-tax laws, had been allowed as an inclusion under invested capital. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
A 1952 schedule, not a new account
You run a machine shop. On March 4 you empty a filing cabinet and find the shop's 1952 federal excess-profits-tax schedule. It lists the 13-inch lathe at $3,600 and the shop lot at $5,400 as admissible assets: those items were allowed as inclusions under invested capital for that repealed tax. The lathe was scrapped years ago. Do not add an Admissible Asset account in QuickBooks Online or Xero, and do not reclass today's fixed assets to match the old schedule. File the papers with the historical tax file and keep the current asset list as the machines you actually own.
The insurer's admitted assets are a different word
On August 19, your commercial insurer emails the commercial renewal for your flower shop. The packet includes a statutory snapshot that lists the carrier's admitted assets, an insurance figure for value in liquidation. That is not an admissible asset, which was a historical excess-profits-tax inclusion in invested capital. Enter the $1,875 premium as insurance expense or prepaid insurance. Leave the $7,900 walk-in cooler on fixed assets. If QuickBooks Online or Xero suggests a new Admissible Asset account from the memo, skip it.
Why it matters
An admissible asset is a historical tax label, not a ledger account. Former excess-profits-tax rules allowed certain property as an inclusion under invested capital; that tax is gone, so you will not post this most months, and most DIY bookkeepers will never post it. You may still see the phrase on old tax papers, or mixed up with admitted asset, an insurance term for value in liquidation. Keep current equipment on ordinary fixed assets. Do not add an Admissible Asset account, and do not treat a new purchase as if it still changes an invested-capital figure.
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What is Admissible Asset in bookkeeping?
An asset which, under provisions and regulations of former excess-profits-tax laws, had been allowed as an inclusion under invested capital.
When should I use Admissible Asset?
Use Admissible Asset when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Admissible Asset?
Admissible Asset is used for admissible asset entries, while Abandonment covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.