Tangible assets mean the assets which have the physical existence in a business firm. In other words we can say that the assets which are physical available with the business firm are called tangible assets. These assets are called more reliable assets because of their physical existence.

Tangible assets may be divided in two parts i.e. fixed assets or current assets.

  1. Current assets:- These assets are shown in balance sheet at actual cost of the assets. for example:-  Cash in hand, bank balance, properties, gold, investments, loans and advances given, inventories, security deposits and other deposits etc.
  2. Fixed assets:- A reasonable depreciation system is adopted to show the cost of the available assets. For example:  furniture, plant and machines, building, vehicles, electric installations etc.

Valuation of tangible assets play a very important part in following cases:-

  1. For Insurance of the assets:- When the insurance of assets of the company is done by any insurance company, in that case, the physical existence of the assets is verified by those companies. In case of any misshapen  in future, the claims are also settled on the basis of assets available physically.
  2. For lenders and financers:- Since the tangible assets have the physical existence, the loans can easily be granted by the bankers, financiers and other lenders to the business firm against hypothecation of the fixed assets and other assets which can easily be sold in open market.

RELATED TERMS: