A tangible asset is one that has a monetary value and is typically in the form of a physical thing. Even though the liquidity of various markets varies, tangible assets can usually be always exchanged for some monetary value. Tangible assets are categorized as fixed assets and are shown on a company’s balance sheet in the long-term assets section.
A tangible asset is anything that can be touched. Because tangible assets have steady, long-term valuations that lenders value, they are often used as collateral for loans. To preserve their value and productive capabilities, these assets usually take up a lot of maintenance, as well as insurance cover.
Fixed assets, commonly known as hard assets, are assets that a company holds for a long time and cannot immediately be turned into cash. Depreciation is the process of reducing the value of fixed tangible assets over time.
Current assets, also known as liquid assets, are assets that can be immediately turned into cash and have been in the firm for a short time, typically less than or equal to a year. Current assets have such considerably higher liquidity than fixed assets.
The Characteristics of Tangible Assets:
- They are used in the business’s day-to-day activities.
- They can be used as a kind of collateral for a loan.
- They have a scrap value or a residual value.
- They lose value over time as a result of depreciation.
- They take the form of real objects that may be seen, felt, or touched.