Answer to Question #208201 in Economics for Cessy

Question

Distinguish between the different types of tangible assets and explain the difference between tangible and intangible assets.

Answer 1

There are two types of assets called tangible and intangible assets. Tangible assets are usually physical assets or property owned by a company, such as computer equipment. Tangible assets are the main type of assets that companies use to produce their products and services.

Tangible assets are the property of legal entities or individuals, which has material form and monetary value. It:

- land owned; - buildings and structures for industrial and non-industrial purposes; - administrative buildings; - non-industrial facilities on the balance sheet of the enterprise (residential buildings, educational, children's, medical, health, sports and other institutions, premises that are on the balance sheet of the enterprise); - installed and non-installed production equipment; - non-production movable property; - stocks of raw materials, fuel, semi-finished products (in warehouses, in workshops and on the way), finished products; - property, fixed assets, leased land plots that belong to the enterprise; branches; subsidiaries, if they do not have the status of a legal entity, and their balance sheets are not split from the balance sheet of the parent company. Tangible assets are subdivided into reproducible (inventories, fixed assets, material and artistic values) and non-reproducible (land, subsoil).

Intangible assets do not physically exist, but have a monetary value because they represent potential income. A type of intangible asset could be the copyright of a song. The record company that owns the copyright will receive a royalty every time the song is played.

There are various types of assets that can be considered tangible or intangible, some of which are short-term or long-term assets.