Tangible assets / Fixed assets

Tangible asset is an accounting concept. Tangible assets that serve the business's activities for more than a year are called this. These assets typically wear and tear: this is called depreciation.

A tangible asset is a tangible asset that serves the interests of a business over a longer period of time. By definition, this period is at least one year. Another such accounting concept is the group of intangible assets. The difference between the two types of assets is that tangible assets exist physically and are tangible, while intangible assets do not. The latter can include, for example, a software or other intellectual product.

There are five main categories of tangible assets:

• real estate and related concessions, licences and similar rights;
• technical equipment, machines, vehicles;
• other equipment, equipment, vehicles, 
• breeding animals.

The fifth category includes investments and renovations. These are actually future tangible assets. They are being procured or produced, the company has not yet put them to use.

The stock of tangible assets can decrease as well as increase. Obviously, the stock increases when we buy, invest, produce or take over assets. The stock decreases if the value of the assets decreases for market reasons, or if they depreciate with the passage of time and use. The stock of tangible assets also decreases if we sell, give away, scrap things, or something is destroyed.

Tangible assets are the favorites of accountants. They must keep detailed records of all tangible assets. This register must contain identification data: date of acquisition, place of use and method of calculating depreciation.

Tangible assets must be included in the in the balance sheet at book value. This is calculated by deducting the depreciation of the fixed asset over the years from the cost. Depreciation is the monetary value of the wear and tear of tangible assets. 

Depreciation (charge) is essentially used to account for the wear and tear of tangible asset. What remains of the gross value of the tangible asset at the end of this process is the residual value.