Difference between Tangible assets and Intangible assets

Difference between Tangible assets and Intangible assets

The asset can be classified in many ways and tangibility is one of that criteria and this criteria is normally used for non current assets. Non current asset are those asset which has a useful life for more than one year.

Tangible Assets

Tangible assets are those assets which cannot be touch. The famous examples of tangible are plant and machinery, building, vehicles, equipment. Tangible assets are depreciated over its useful life for the wear and tear.

Intangible assets

Intangible assets terminology normally used for non current asset which cannot be touched. Famous example of noncurrent assets are goodwill, patent right, customer list etc.

1.Depreciation

Tangible are depreciated for wear and tear where intangible asset are amortized over the period. Depreciation and amortization both are systematic allocation of useful life.

2.Useful life

Tangible asset has a finite useful life however some intangible asset has infinite useful life.

3.Reporting

Tangible and intangible asset are separately reported i.e. shown separately in the financial statement.

4.Recognition

Tangible and intangible assets are recognized in the book of account when it is certain that economic benefit associated with those assets would flow to the organization and the amount of asset can be measured with reliability.