Difference Between Tangible And Intangible Assets

Gain a clear understanding of tangible and intangible assets, their impact on business valuation, and how they are treated in financial accounting.

Tangible assets

Tangible assets are those assets that are physically existence. They used to operate business activities. Over the use for a long period of time, it is destroyed.

Example:

• Furniture

• Vehicle

• Machinery

• Land and Building

Intangible Assets

Intangible assets are those assets that don't have a physical existence. It works as a long-term resource to the firm. It is very useful for the future

Example:

• Patent

• Copyright

• Trademark

• Goodwill

Difference Between Tangible and Intangible Assets

1. Tangible assets are destroyed by fire, accident and human negligence. Whereas intangible cannot be destroyed by fire, other calamities, carelessness or any side effects of the business decision.

1. Tangible assets are converted to cash and can be weighed in monetary. Whereas Intangible assets are difficult to convert into cash on an immediate basis.

1. A tangible asset is that which is purchased by a proprietor for conducting business activities for a long period of time, and intangible assets are those which have economic value and a certain life.

1. The lender always accepts tangible assets as security for providing loans and financial help. But in the case of intangible assets don't accept these assets as security.

1. The tangible assets' book value and market value change due to depreciation. In the case of intangible assets adds to the current market value but the book value shall remain the same.