Tangible and Intangible Assets Research Paper Example | Topics and Well Written Essays - 1750 words

Tangible and Intangible Assets - Research Paper Example Intangible assets cannot be seen or felt that is they are non-physical in nature and they are usually non-monetary. Intangible assets are basically the long term resources of the given firm, usually the legal rights of the firm including patents, trademarks, goodwill and copyrights. Intangible assets cannot be destroyed by fires or other tragedies and they usually add value to the company’s financial worth. Tangible assets are physical and identifiable and can be seen and touched. Since businesses are different they also have different tangible assets depending on their type of business. A company’s financial worth is determined by the amount of tangible assets that it has in its possession. Tangible assets can further be categorized into current and fixed assets. Current assets consist of assets that can be easily converted to cash/liquidated. An example is the firm’s bank accounts and its inventory (Hoffman, 2012). Fixed assets are not easily liquidatable and most generally depreciate with time except land. Fixed assets are usually used up in the production process and they may include machinery, equipments, vehicles, land and buildings. Financial recording of tangible and intangible assets is usually done differently, with the tangible assets further divided into current and fixed assets. ... Current Assets A company has these assets on hand and easily available. Companies can easily liquidate these assets. Current tangible assets would include inventory and bank accounts that a company or a business has. Fixed Assets These kinds of assets are exactly the opposite of the current assets. Fixed assets are depreciated over time and they are not easy to liquidate compared to current assets. Fixed tangible assets would include land, building, furnishings, art, historical treasure, and equipment. Tangible Assets Tangible assets have a physical form and can be seen and felt. As discussed above there are two types of tangible assets current and fixed. Current assets can be easily liquidated and converted to cash. They can also be used as collateral for the company to acquire loans. Current assets also have a shorter lifespan and are utilized in the daily operations of the company. Inventory or the stock falls under the current tangible assets and it usually has a life span of les s than a year. A company’s inventory basically is the products it produces to sale or the goods it distributes at a profit (Capital Fixed Asset Guide, 2013). The inventory is recorded daily, weekly or monthly in the company’s balance sheet. To record the inventory as well as other current assets they allocate the expense of the asset to the year the business purchased the asset. Another type of current asset is the business bank account, and it is recorded in the same way as the inventory in the balance sheet. Fixed assets are recorded differently since they have a longer lifespan of more than a year. They are usually purchased to be used for a long time in the firm’s production process. Examples of fixed assets are buildings, land, equipments, machinery and company