tangible asset

Examples of tangible asset in the following topics:

• Types of Long-Lived Assets

  • The two major asset classes are tangible assets (e.g., buildings and equipment) and intangible assets (e.g. copy rights).
  • There are two major types of long-term assets: tangible and non-tangible.
  • Tangible assets include fixed assets, such as buildings and equipment.
  • Property, plant, and equipment are tangible, long-lived assets used in the operations of the business.
  • They are listed under the asset portion of the balance sheet.

• Assets

  • In financial accounting, assets are economic resources.
  • Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset.
  • Two major classes are tangible assets and intangible assets .
  • Tangible assets contain various subclasses, including current and fixed assets.
  • Current assets include inventory, while fixed assets include such items as buildings and equipment.

• Noncash Items

  • Fixed assets, also known as a non-current asset or as property, plant, and equipment (PP&E), is an accounting term for assets and property.
  • PP&E are often considered fixed assets: they are expected to have relatively long life, and are not easily changed into another asset .
  • On a more detailed level, depreciation refers to two very different but related concepts: the decrease in the value of tangible assets (fair value depreciation) and the allocation of the cost of tangible assets to periods in which they are used (depreciation with the matching principle).
  • For example, an asset worth $100,000 in year 1 may have a depreciation expense of $10,000, so it appears as an asset worth $90,000 in year 2.
  • Examples of intangible assets include copyrights, patents, and trademarks.

• Total Assets Turnover Ratio

  • Total asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.
  • Total assets turnover = Net sales revenue / Average total assets
  • Anything tangible or intangible that is capable of being owned or controlled to produce value, and that is held to have positive economic value, is considered an asset.
  • Tangible assets contain various subclasses, including current assets and fixed assets.
  • Current assets include inventory, while fixed assets include such items as buildings and equipment.

• Terminology of Accounting

  • Two major asset classes are intangible assets and tangible assets.
  • Intangible assets are identifiable non-monetary assets that cannot be seen, touched or physically measured, are created through time and effort, and are identifiable as a separate asset.
  • Tangible assets contain current assets and fixed assets.
  • Current assets include inventory, while fixed assets include such items as buildings and equipment.
  • If liability exceeds assets, negative equity exists.

• Cost of Equipment

  • Fixed assets, also known as non-current or tangible assets, include property, plant, and equipment.
  • Fixed assets, according to International Accounting Standard (IAS) 16, are long range assets whose cost can be measured reliably.
  • Historical cost also includes delivery and installation of the asset, as well as the dismantling and removal of the asset when it is no longer in service.
  • Depreciation is a periodic reduction in an asset's value.
  • The cost of equipment includes all costs paid to put the asset into use.

• Fixed Assets Turnover Ratio

  • Fixed-asset turnover is the ratio of sales to value of fixed assets, indicating how well the business uses fixed assets to generate sales.
  • This can be compared with current assets, such as cash or bank accounts, which are described as liquid assets.
  • In most cases, only tangible assets are referred to as fixed.
  • Fixed asset turnover = Net sales / Average net fixed assets
  • Fixed-asset turnover indicates how well the business is using its fixed assets to generate sales.

• Depreciation

  • Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with the matching principle).
  • Any business or income producing activity using tangible assets incurs costs related to those assets.
  • The costs are allocated in a rational and systematic manner as a depreciation expense to each period in which the asset is used, beginning when the asset is placed in service.
  • the expected salvage value, also known as residual value of the asset
  • The cost of an asset so allocated is the difference between the amount paid for the asset and the salvage value.

• Defining Long-Lived Assets

  • Assets are economic resources.
  • It is anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset.
  • Simply stated, assets represent value of ownership that can be converted into cash.
  • Since non-current, or long-lived, assets are expected to last for longer than one year, accounting treats long-lived assets differently according to their useful life.
  • When assets are expected to contribute to earnings for multiple years, such assets are referred to as long-lived, non-current or long-term assets.

• Indefinite-Life Impairment

  • Because Indefinite-life tangibles continue to generate cash they can't be amortized; they must be evaluated for impairment yearly.
  • In accounting, intangible assets are defined as non-monetary assets that cannot be seen, touched or physically measured.
  • Since intangible assets are typically expensed according to their respective life expectancy, it is important to understand the difference between limited-life intangible assets and indefinite-life intangible assets.
  • Indefinite-life tangibles are not amortized because there is no foreseeable limit to the cash flows generated by those intangible assets.
  • Instead of amortization, indefinite-life assets are evaluated for impairment yearly.