Tangible assets

DEFINITION of Tangible assets

Tangible assets represent physical items with a clear purchase value used by a company to produce goods and services.

WHAT IT IS IN ESSENCE

They are physical and measurable assets that some company use in its operations. Tangible assets can be securities like stocks, bonds, cash, land, vehicles, furniture, machinery, inventory, equipment.

Tangible assets are dividing into two groups: fixed and current.

Current assets, known as liquid assets too. are either cash or items which a company expects to sell by the end of the financial year. The company can sell current assets to increase cash flow or ease debts and other liabilities.

The stock is an example of a current asset because there is an expectation they will be sell in the near future.

Fixed assets are physical items that the company cannot easily sell instant. These assets are long-term investments or they are essential for the day-to-day running of the business.

Machinery and property are examples of fixed assets, as both are essential in the running of the business so cannot easily be sold.

But company have as properties also intangible assets.

They are are nonphysical assets such as intellectual assets. It is difficult to determine their value because of the uncertainty of the future benefits.

Intangible assets are patents, trademarks franchises, goodwill, copyrights, company’s brand, internet domain names.

Also, performance events, licensing agreements, service contracts.

Or can be computer software, blueprints, manuscripts, joint ventures, medical records, permits, and trade secrets.

HOW TO USE

Tangible assets form an important part of assets owned by a business. They play a critical role in carrying out business operations effectively.

There can be some consideration about the way you calculate them.

However, fixed assets are depreciated over time, depending on the method of depreciation adopted. Hence the figure could vary from one business to another.

Then again, you must separate such assets from intangible ones. In order to be able to evaluate and measure their worth with any amount of accuracy.

And this is exactly what net tangible assets is all about.

Having said that, the relevance of measures associated with tangible assets obviously have their limitations.

It is due to the difference in levels of intangible and tangible assets for different industries.