ACCOUNTING

Accounting

[Name of the Institute]

Accounting

Introduction

Assets are the products that have worth that can be gauged economically. There are two different types of Assets. Tangible Assets and Intangible Assets. Intangible assets are the assets that does not have any physical existance on the (Lin, 2010) other hand the tangible assets are the assets that have the physical appearance and also they are held for use in the supply or in the production of the goods and the services. These assets are also used for the rental to others, or for the purpose of administration on a regular basis in the reporting activities of business entities.

Discussion

Classification and Examples

Tangible assets are classified in both the current and the fixed assets.

Current Assets

Current Assets are those assets that can be either converted to cash or can be used to pay off the debt with the one year period (twelve months).In current Assets, tangible assets are classified as Funds in bank account, trade receivables, and inventories.

Fixed Assets

Fixed Assets are those assets that do not possess liquidity or in other words these assets cannot be converted in to cash. (Manole,2010) Fixed assets are also called as noncurrent Assets. Example of tangible fixed assets are building, land, machinery, office equipments, and motor vehicles.



Characteristics of Tangible Assets

The tangible assets have the physical existance and also called as the reproducible assets, real assets or the hard assets for the business firm. A large hunk is generally formed in the portion of assets in the balance sheet because of the tangibe assets. These assets can be used in order to fix the price of the company because of their physical existance. These assets donot help a firm to put a finger in the value or the worth of the company as the total value of the company includes the tangible assets. Another main chancracteristic (Srivastava, 1998) of the tangible assets is that after the purchase of the assets, the value of the assets will be declined for instance if the tangible assets is purchased for a certain amount today, it will become second hand after a minute it is purchased and also on very next day if it is sold than its worth will decrease or it will be sold at the lower value.These assets can also be used as the security of the cpllateral for getting the funds or the loans from the bank or the financial institution. If the loans are secured and are in hold of the firm, it is usually (Kaplan, 2004) secured against the tangible assets that are on the left (asset side) of the balance sheet of the company.

Other examples of the tangible assets are cash, bank deposits, account receivables, real estate and others. Though the tangible assets are seen as the best way in order to invest money but the investor should remember about the value of the tangible asset after the depreciation hence in order to take the benefits the investor must invest wisely. It helps a company in order to contribute the cash ...