Tangible assets and intangible assets both are shown in the balance sheet's asset side. Both give long term benefits to company. But there are lots of differences between tangible assets and intangible assets which we can explain in following lines.
1. Physical Touch
Tangible Assets : We can touch tangible assets physically. With the eyes, we can see it. With hand touch, we can feel it. For example offline school building. It is tangible asset. There are lots of other examples of tangible assets like furniture, inventory, cash, equipment, vehicles or land.
Intangible Assets : We can not touch intangible assets physically. Neither, we can see nor we can touch it physically. For example, goodwill of any company. There are lots of other examples like trade marks, virtual school existence, patents, licensing agreements, service contracts, computer software, blueprints, manuscripts, joint ventures, medical records, permits and trade secrets.
2. Type of Assets
Tangible Asset : These assets may be fixed asset or current asset.
Intangible Assets : These asset can only be fixed assets nature.
3. Show the Decrease in the Asset
Tangible Asset : We show decrease in the tangible asset with depreciation.
Intangible Asset : We show decrease in the intangible asset with amortization.
4. As a Security
Tangible Asset :These assets can be accepted as security.
Intangible Assets : These assets can not be accepted as security. Because there is not fixed standard to calculate the market price of these type of assets. For example, I can take loan on my bike because insurance agent easily tell the market price of bike. I used it for 5 years. I bought it of Rs. 50,000. Now its value is Rs. 25000. So, easy. But in intangible assets, it is not so easy.
5. Physical Risks
Tangible Asset :There are lots of physical risks of loss of tangible assets like fire, theft, stolen, lost in flood and earthquake.
Intangible Assets : There are not such risk of loss of intangible assets
Understand difference with Practical Business Example
Related Resources
1. Physical Touch
Tangible Assets : We can touch tangible assets physically. With the eyes, we can see it. With hand touch, we can feel it. For example offline school building. It is tangible asset. There are lots of other examples of tangible assets like furniture, inventory, cash, equipment, vehicles or land.
Intangible Assets : We can not touch intangible assets physically. Neither, we can see nor we can touch it physically. For example, goodwill of any company. There are lots of other examples like trade marks, virtual school existence, patents, licensing agreements, service contracts, computer software, blueprints, manuscripts, joint ventures, medical records, permits and trade secrets.
2. Type of Assets
Tangible Asset : These assets may be fixed asset or current asset.
Intangible Assets : These asset can only be fixed assets nature.
3. Show the Decrease in the Asset
Tangible Asset : We show decrease in the tangible asset with depreciation.
Intangible Asset : We show decrease in the intangible asset with amortization.
4. As a Security
Tangible Asset :These assets can be accepted as security.
Intangible Assets : These assets can not be accepted as security. Because there is not fixed standard to calculate the market price of these type of assets. For example, I can take loan on my bike because insurance agent easily tell the market price of bike. I used it for 5 years. I bought it of Rs. 50,000. Now its value is Rs. 25000. So, easy. But in intangible assets, it is not so easy.
5. Physical Risks
Tangible Asset :There are lots of physical risks of loss of tangible assets like fire, theft, stolen, lost in flood and earthquake.
Intangible Assets : There are not such risk of loss of intangible assets
Understand difference with Practical Business Example
Related Resources
Comments