Tangible Assets
Assets which have a physical existence and can be touched and felt are called tangible assets. They consist of both fixed and current assets, they are always at risk of destruction from natural incidents, theft, accidents, etc. A business would usually insure them to safeguard themselves against unseen future events.
It’s easy to determine useful life for tangible assets, examples of tangible assets are plant, machinery, building, stock, cash, furniture, etc.
They can be readily used as a collateral against secured loans and at times of emergencies they can be sold to bring in cash. Unlike intangible assets they can easily be stored and accumulated as well.
Types of Tangible Assets
- Current Assets – They are assets which are held for a short period mainly for within a single accounting cycle of a business. Benefits of current assets are expected to flow for a period of equal to or less than a year.
Examples – Cash, bank, stock, etc.
- Fixed Assets – They are assets which are held for a long-term and benefits of which are derived for multiple accounting period. They can’t be converted to cash immediately.
Examples – Land, plant, machinery, vehicles, etc.
Fixed assets are charged with depreciation due to normal usage, wear and tear, new technology or unfavorable market conditions.
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