What is an asset?
What is an asset – An asset, in business terms, is something bought by a company to increase its value and income, or to help benefit the company’s overall operations. Assets will be recorded on a company’s balance sheet, and can either be tangible or intangible.
What is the difference between a tangible asset and an intangible asset?
To easily distinguish between these, visualise tangible assets as physical assets. Or more importantly, they’re items that are not consumed during the course of the business. For example, buildings, company equipment or company cars. You can usually find tangible assets listed under Plant, Property and Equipment on your company’s balance sheet.
On the other hand, an intangible asset is something that is non-physical, such as a brand name, domain names or computerised databases. These assets on the other hand are listed separately on the balance sheet, and they should be identifiable, controlled by the company and increase future profits. These assets are more likely to bring in more value than tangible assets, as they usually add to a company’s future worth.
Some more examples of tangible / intangible assets include:
- Cash at bank and in hand – Tangible
- Inventory – Tangible
- Land – Tangible
- Software – Intangible
- Website – Intangible
- Patented technology – Intangible