Tangible assets are those assets in a physical form, which a company owns and can be seen or felt.
Features
- They are also called as reproducible assets, hard assets or real assets.
- These assets are subjected to depreciation from the minute they are bought.
- They can be used as a security against a loan.
Types of tangible assets
They can be broadly classified into two categories:
Fixed assets - On contrary to their name, it does not mean that these assets can not be moved, but they are the ones which are not bought with the intention of immediate reselling.
They are often bought for productive use.
Examples:
- Computer equipments
- Land
- Machinery
- Furniture
- Buildings etc
Current assets- These are the ones which can be converted into cash within the operating year.
They are used within a short period and the value is obtained after selling them.
They can be used for day-to-day ongoing expenses.
Examples:
- Inventory- It refers to the products or the goods lying on the shelf ,for sale like the cartons of cold-drinks etc.
- Prepaid expenses, not because they can be converted to cash but because they are used to free cash for various other uses.
