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Difference Between Tangible vs IntangibleTangible means anything which we can touch, feel, and see. Any tangible assets are assets that have physical existence and physical property; it can be touched—tangible assets mostly associated with fixed assets. Examples of tangible assets include Land, Building, Machinery, Equipment, Cash, Stock, Plant, any property that has long term physical existence or purchased for the use of business operations and not for sale, Vehicles, etc. An Intangible Asset is assets that do not have a physical existence. It is not possible to see, touch or feel these assets. Intangible Asset’s useful life is usually greater than one year. Example of Intangible Assets includes Goodwill, Patent, Brand, Copyright, Trademarks, and Permits Patent, Brand, Copyright, Trademarks, and Permits, etc. Types of AssetsAssets are divided into 3 main categories as per below. Let discuss the asset category of Physical existence in detail. Physical Existence: In this category, assets are divided based on their existence. Assets in this category further divided into two subcategories.
Tangible AssetsTangible assets are used as collateral for loans since such assets have a long term valuation that is valuable to a lender. Tangible assets are purchased at a measurable price; it is much easier to value Tangible assets than Intangible Assets. Tangible assets required maintenance to support their values and production capabilities. Tangible assets easily sold to raise cash in emergencies. High-risk industries such as banking and finance use their tangible assets to reassure investors as this asset can always be liquidated and converted into cash. Intangible AssetsIntangible Assets further divided into two categories (a) Indefinite (b) Definite. Any Intangible asset that stays longer with the company is called Indefinite Intangible assets, for example, the company’s brand name which stays as long as it continues operation. Any Intangible asset which has limited life is called as Definite Intangible assets. For example, legal agreement to operate under another Company’s patent with no plan of extending the agreement. Intangible assets cannot be used as collateral to raise the loan. The automobile industry has several Intangible assets, including patents, research, development, brand name, etc. Let’s look at the example of tangible and intangible assets, Its just an example created by Taking XYZ as a person here and he is having a business of car manufacturing so for him tangible assets are machinery, Building, all types of equipment used for the production of car, inventory, etc. Now let say XYZ person need a small part of the car for a production car, so he contacted to the person who is having small part production business, and he agrees that he will supply the small part to XYZ person manufacturing unit, but the value of that contract is not clear at this moment so this contract is an intangible asset for XYZ person at this moment because its value yet not fix and its just and legal agreement between two parties which not physical in nature. Head to Head Comparison between Tangible vs Intangible (Infographics)Below is the top 8 difference between Tangible vs Intangible Key Differences between Tangible vs IntangibleLet us discuss some of the major differences between Tangible vs Intangible.
Tangible vs Intangible Comparison TableLet’s look at the top 8 Comparisons between Tangible vs Intangible.
ConclusionBoth tangible vs intangible assets are recorded by the company in their books of accounts. Tangible assets are very important for any company for the smooth running of their operations; Intangible assets help in creating the future worth of a company. In order to be successful company needs to have a good combination of tangible vs intangible assets. When comparing the two, both tangible vs intangible assets have their pros and cons, but they impact the functioning of the organization. Intangible assets provide a company with its identity through its strong brand name. Nowadays, some survey suggests that companies’ value is now mostly generated by intangible assets because of effective usage of knowledge and therefore knowledge management. In this era of knowledge or information economy, the management of intangible assets is a very important competitive advantage and sustainable performance. Recommended ArticlesThis has been a guide to the top difference between Tangible vs Intangible Here we also discuss the Tangible vs Intangible key differences with infographics and a comparison table. You may also have a look at the following articles to learn more.
Why is tangible and intangible important?Sometimes, tangible benefits are considered more important than intangible ones. This because they are quantifiable and immediately recognizable. However, it is necessary to remember that intangible benefits deserve the same consideration, since they constitute a significant part of an organization's value.
What is the difference between tangible and intangible resources?Tangible assets are the main type of assets that companies use to produce their product and service. Intangible assets are non-physical assets that have a monetary value since they represent potential revenue. Intangible assets include patents, copyrights, and a company's brand.
What do you understand by tangible and intangible components of differentiation?Differentiation can be classified into two basic types vis a vis. Tangible differentiation. Intangible differentiation. As the name suggests, tangible means, something which is real and can be seen, touched, etc. whereas intangible means, something which is abstract in nature and cannot be touched, it can just be felt.
Is tangible or intangible more important?Often, intangible assets are more valuable to a business than their tangible assets.
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