Tangible vs Intangible Assets

The primary difference between tangible and intangible assets is that tangible assets have a physical existence and can be felt and touched. In contrast, intangible assets are the assets that do not have any physical existence and the same cannot be felt and touched.

A tangible asset has a physical existence and a certain economic value. These physical resources are essential for smoothly conducting business operations and are not saleable. Some of the examples are:

• Land & Buildings
• Machinery
• Furniture
• Vehicles

Intangible assets do not have a physical existence but possess commercial value and act as a long-term resource to the firm. Some of the instances include:

• Goodwill
• Copyright
• Patent
• Trademark

Let’s see the top differences between tangible vs. intangible assets and infographics.

1. A tangible asset is owned by an individual or organization and utilized for conducting business activities over a long period. Intangible assets are those which have an economic value and a specific life. These are considered earned over the hard work executed over a long period.
2. The existence of tangible assets is essential for the functioning of an organization, but the non-existence of intangible assets will not have a widespread impact on a firm. It offers a cushion to those associated with the name it has made for itself in the industry.
3. Tangible assets can be converted into cash since they can be viewed to the eye and can be weighed in monetary terms, whereas later are difficult to convert into cash immediately.
4. Fire and accidents can destroy tangible assets or human negligence. In contrast, intangibles cannot be destroyed by fire or other disasters but by carelessness or any side effect of a business decision.
5. The Book market value and the book value of a tangible asset change due to depreciation; Whereas in the case of an intangible asset, the market value changes, but the book value shall remain the same.
6. The value of a tangible asset adds to the current market value, but the value gets added to the potential revenue and worth in the case of the intangible asset.

The company recorded both tangible and intangible assets in its books of accounts. Tangible assets are highly crucial for any organization since it aids in the smooth running of the operations; intangible assets help create the firm's future worth. Though both have their pros and cons, they impact the functioning of an organization.

It is also essential to know that determining a company's Tangible assets offers various benefits; the usefulness varies significantly across industries. E.g. in the case of hospitals or medical device manufacturers, intangible assets are far more valuable than tangible ones. On the other side, industries such as real estate would have intangible assets, but the tangible ones will provide the revenues they require for operations.

This has been a guide to Tangible vs. Intangible Assets. Here we discuss the top differences between them and infographics and a comparative table. You may also have a look at the following articles –

• Differences of Current and Non-Current Assets
• Net Asset Value Formula
• Non-Current Assets Meaning
• Assets vs. Liabilities
• Bailment