Tangible Asset Criteria
Tangible assets include any property that has a long life or is used in the operation of a business. Cash, equipment, machinery and plant are all considered tangible assets, according to BusinessDictionary.com. In rare cases tangible assets may be destroyed by accidents, fires, hurricanes or other disasters.
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Reproducable vs. Non-reproducable Tangible Assets
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Tangible assets can be either reproducible or non-reproducible. A reproducible tangible asset list might include buildings, clothes, dwellings, food, machinery and weapons, all of which could be reproduced or recreated if necessary. Non-reproducible assets cannot be replicated. Examples include a work of art, a piece of land or a mine -- all items that cannot be reproduced exactly.
Net Tangible Assets Per Share
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The net tangible assets per share calculation gives one way of expressing the underlying value of a stock. The formula for determining the net tangible assets per share takes the tangible assets and subtracts all liabilities and the par value of the company's preferred stock. This figure is then divided by the number of outstanding shares. According to The Free Dictionary by Farlex, corporate raiders and investors commonly use this measure when searching for undervalued stocks.
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Tangible vs. Intangible Assets
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Tangible assets are the opposite of intangible assets. A popular brand name can be very valuable to your company, yet may not be considered a tangible asset because you cannot touch or feel a brand name. While an intangible asset may be best described by noting its lack of physical substance, just the opposite is true of a tangible asset. Intangible assets, sometimes called spiritual assets, include copyrights, development findings, goodwill, know-how, licenses, patents, research, software and trademarks. Many intangible assets are intellectual assets. While these may not take a physical form, each is an important asset required for an enterprise's business activity. Unlike tangible assets, you cannot touch and feel intangibles.
Value of Tangible Assets
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The physical properties determine the value of a tangible asset, sometimes called real or hard assets. Tangible assets, comparatively easy to price, are frequently used for stating the value of an enterprise. However, because intangible assets such as patents or copyrights are not tallied in this form of valuation, tangible assets alone cannot express the true value of a business. Tangible assets may be used as as loan collateral or sold if the business needs cash.
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References
- BusinessDictionary.com: Tangible Asset
- The Free Dictionary by Farlex: Financial Dictionary: Tangible Asset
- International Consortium on Agricultural Biotechnology Research; Criteria for Accounting Treatment of Intangible Assets; Jaroslav Sedlacek, et al.
- The Free Dictionary by Farlex: Financial Dictionary: Intangible Asset
- The Free Dictionary by Farlex: Financial Dictionary: Net Tangible Assets Per Share
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