Difference Between Tangible and Intangible Assets

The tangible assets are the class of assets that are physically present, thus they can be seen or touched. On
the other hand, the intangible assets represent the assets which are abstract, i.e. they can neither be seen
nor touched, but can only be experienced.

Assets are anything having some value, which is owned by an individual or firm and is expected to provide
economic benefit in future. It is the basic business requirement that is needed by the company for its smooth
functioning. It is broadly classified as non-current assets and current assets. Non-current assets are further
divided into tangible and intangible assets

Definition of Tangible Assets

Tangible assets refer to the long-term physical resources owned by the corporation, which has certain
economic value. Corporation acquires such assets in order to carry out business operations smoothly and not
for the purpose of sale. It includes plants & machinery, tools & equipment, furniture & fixtures, building,
vehicles, land, computers, building, etc. These assets suffer the risk of loss due to fire, theft, accident or any
other disaster.

Tangible assets have a useful economic life, after which it becomes obsolete. Depreciation is a method used
by the firm to spread the part of asset’s expense over its economic life.

Definition of Intangible Assets

Intangible assets, as its name suggests are the long-term incorporeal resources owned by the company, which
have a definite commercial value. It includes goodwill, trademark, copyright, patent, intellectual property,
licensing agreements, brand, blueprint, Internet domains, etc.

Such assets are expected to create future cash flows and earnings. They are reported at their net book value,
i.e. the gross value of the asset less accumulated amortisation.

Key Differences Between Tangible and Intangible Assets

The points given below are noteworthy, so far as the difference between tangible and intangible assets
is concerned:

1. Assets acquired by the firm which is having monetary value and is materially present is called
tangible assets. Incorporeal assets which have a certain useful life and an economic value is
called intangible assets.
2. Tangible assets are the assets which are present with the company in their physical form. On
the other hand, intangible assets are the assets which so not exist physically rather they are
abstract.
3. While the reduction in the value of tangible assets is termed as depreciation, intangible assets
are amortised.
4. Due to the material presence of tangible assets are readily convertible into cash in case
emergency. Conversely, it is a bit difficult to sell intangible assets.
5. Salvage value is the residual or scrap value of the asset after it is completely depreciated.
Tangible assets have salvage value, but intangible assets do not have salvage value.
6. Tangible assets are accepted by the lenders while granting a loan to the firm. As against this,
intangible assets cannot be used by the firm as collateral to raise loans.
7. Intangible personal property has no physical shape but represents something else
of value.
8. Intellectual property is one of the most common forms of intangible personal
property.
What Is Intangible Personal Property?
The term intangible personal property refers to an item of value that
cannot be touched or physically held. These assets can be held by
both individuals and corporations. Intangible personal property can be
anything that has image, social, and reputational capital, along with
digital, copyrights, patents, and investments. Intangible personal
property or intangible assets are the opposite of tangible personal
property, which can be physically touched and come with a degree of
value, such as machinery, jewelry, and electronics
Understanding Intangible Personal Property
Personal property can be divided into a few different categories—
notably tangible and intangible personal property. Tangible personal
property is anything that can be held and has definitive value while
intangible personal property is anything that doesn't have any obvious
value and can't be touched. We discuss the differences between the
two a little further down.
The value in intangible personal property lies in the associated benefits
and value recognition. Intellectual property is one of the most common
forms of this type of property. Other types of intangible personal
property include life insurance contracts, securities investments,
royalty agreements, and partnership interests. The most common
forms of intangible property for companies include goodwill, research
and development (R&D), and patents.
Copyright TYPES OF INTELLECTUAL PROPERTY
Copyright law deals with the protection and exploitation of the expression of ideas in a
tangible form. Copyright has evolved over many centuries with respect to changing
ideas about creativity and new means of communication and media. In the modern
world, the law of copyright provides not only a legal framework for the protection of
the traditional beneficiaries of copyright, the individual writer, composer or artist, but
also the publication required for the creation of work by major cultural industries, film

Patent
Patent law recognizes the exclusive right of a patent holder to derive commercial
benefits from his invention. A patent is a special right granted to the owner of an
invention to the manufacture, use, and market the invention, provided that the
invention meets certain conditions laid down in law. Exclusive right means that no
person can manufacture, use, or market an invention without the consent of the patent
holder. This exclusive right to patent is for a limited time only.

The purpose of patent law is to encourage scientific research, new technology, and
industrial progress.
Trademark
A trademark is a badge of origin. It is a specific sign used to make the source of goods
and services public in relation to goods and services and to distinguish goods and
services from other entities. This establishes a link between the proprietor and the
product. It portrays the nature and quality of a product. The essential function of a
trademark is to indicate the origin of the goods to which it is attached or in relation to
which it is used. It identifies the product, guarantees quality and helps advertise the
product. The trademark is also the objective symbol of goodwill that a business has
created.

Industrial design
It is one of the forms of IPR that protects the visual design of the object which is not
purely utilized. It consists of the creation of features of shape, configuration, pattern,
ornamentation or composition of lines or colours applied to any article in two or three-
dimensional form or combination of one or more features. Design protection deals
with the outer appearance of an article, including decoration, lines, colours, shape,
texture and materials.

Geographical indication
It is a name or sign used on certain products which corresponds to a geographic
location or origin of the product, the use of geographical location may act as a
certification that the product possesses certain qualities as per the traditional method