Difference Between Tangible and Intangible Assets

Tangible Assets

Tangible Assets are the assets that have physical substance and we can see and touch. They are the assets belong to the company and be able to provide future benefit to the company. These kinds of assets face physical risks such as damage, thief and fraud.

They are separated into fixed assets and current assets. Current assets are the assets that is expected to exist in less than a year. Non-current assets are the assets that their useful life more than a year from the reporting date.

Tangible Assets include cash, inventory, accounts receivable, fixed assets, and so on.

Intangible Assets

Intangible assets are the assets that do not have physical substance, but they have value and be able to generate revenue in the future. They do not have physical in nature which we are not able to touch and see. They include goodwill, patent, copyrights, software, and so on. The company can purchase or create such kinds of assets. Self-created intangible assets do not appear on the company’s financial statement as it is hard to estimate its value.

Intangible assets can be indefinite or definite which depends on the nature of assets. The patent may be last for few years depending on the agreement. So the useful life of this intangible asset depends on its lifetime. The brand name will last forever, so its life will last forever.

The financial assets do not have physical existent but they are not classified as intangible assets. These assets include investments in shares, bonds, and other types of receivables.

Difference Between Tangible and Intangible Assets

Tangible Assets Intangible Assets
Have physical existence Does not have physical existence
They are depreciated over time depend on the useful life. They are amortized over time depend on the useful life. While some assets are not amortized as they last forever.
It is easy to quantify the cost of assets which includes the purchase price and other costs that bring assets to use. It is hard to the quantified the cost of intangible assets.
Easy to evaluate the assets’ value and sell for cash. Hard to evaluate or sell the assets.