Tangible Assets

What is Tangible Assets

Tangible assets are those assets have physical existence . The example of tangible asset are Land, Building, Machinery and Inventories. The Tangible assets form an important part of financial statements . Tangible assets  are kept in the organization for production , supply of good , and administrative purposes.

Types of Tangible assets

There are mainly two types of tangible assets . Long term Tangible asset are those asset which has useful life for more than one year also known as Fixed Assets. Example of long term tangible asset are building, plant and machinery.

The other type of tangible asset are current tangible asset which are expected to be utilized within one year. The assets are called current Tangible assets. Examples of current tangible assets are inventories items.

Useful life of Tangible Assets

This refers to the period during which the economic benefit would be derived from the assets. In other word it is the period during which tangible asset will be  utilized by the organization. 

Accounting Treatment of Long term Tangible Asset

1. Initial Recognition

Initially assets would be recognized at cost.

2. Subsequent Recognition 

subsequently asset may be recognized at cost or revalued amount.