Difference Between Tangible and Intangible

Tangible vs intangible

In accounting, it is important to understand how intangible and tangible assets differ. This is very important because a company’s stability may be based on these assets. Understanding intangible and tangible assets is important because it can keep track of the properties of a company.

One of the main differences between a tangible asset and an intangible asset is that a tangible asset can be seen and felt while intangible assets can’t. An example of a tangible asset is a computer. An example of an intangible asset is information. These are very important parts of a company. This is why an accountant must know the difference between the two. There are times that the variability of an intangible asset is higher than that of the tangible asset. This has a significant effect on the discrepancies of the book and market values of a company’s assets.

Here are the differences between intangible and tangible assets and how both benefit a company differently:

One type of a tangible asset is the long-term asset. Companies have assets they intend to keep for a long period of time. These assets are physical, meaning, they can be touched, seen, and felt. These kinds of tangible assets are called long-term assets. Land, buildings, and other equipment are some of the most common examples of these assets. After a long period of time, these assets will be depreciated by the company’s accountant. All of these long-term, tangible assets will be depreciated except for the land. After a long period of time, these assets will not have their original value when they were first purchased. Being tangible and being kept for a long time may affect the value of an asset.

Intangibility is another factor that affects the market value of an asset. An intangible asset literally has no physical form. Even though it has no physical form, the value it has for the company is still very high. Information, logos, contracts, and patents are some of the examples of an intangible asset. Because these assets do not have physical form, like land and buildings, it is very difficult to liquidate these assets–making it hard to give it a proper value. One of the best ways to give value to an intangible asset is by determining what a certain company would be like without that intangible asset. With this factor, owners of these assets can exploit it for a price so much higher than it should be. This could either benefit the company in the long run or break them in the end.

SUMMARY:

1.Tangible assets have physical form; they can literally be seen and felt. However, intangible assets do not have physical form.

2.Intangible assets can be liquidated through determining what a company would be without it, while tangible assets are liquidated by the company’s accountant.

3.Intangible assets may have a higher price compared to tangible assets because intangible assets are difficult to liquidate and can easily be exploited by the owners at a much higher price.

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