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Tangible Assets

Definition

The financial accounting term tangible asset is used to describe assets that have physical substance. Examples of tangible assets include cash, accounts receivable, inventory, land, buildings / real estate, and machinery.

Explanation

Tangible assets are usually long term assets, and can be found on a company’s balance sheet. The term is often associated with property, plant, and equipment, which is usually subdivided into two categories:

  • Land: considered an asset with an unlimited term of existence; therefore, land is never depreciated.
  • Property and Plant: assets that have a limited term of existence; therefore, they are subject to depreciation.

Current assets are also considered tangible assets and include cash, marketable securities, accounts receivable, inventories, and prepaid items.

Assets that lack a physical structure are called intangible assets, which include goodwill, copyrights, trademarks, patents, franchises, and organization costs.

Related Terms

balance sheet, intangible asset, property, plant and equipment, current assets, depreciation