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Tangible Asset

Sachin Nagarajan

What is a tangible asset?

A tangible asset is an asset that has physical form and value.

There are two types of tangible assets: fixed assets (ex: buildings, machines, and tools) and current assets (ex: cash, stock inventory, and accounts receivable). Fixed assets often last long, but they depreciate and lose value as they get older. Current assets are very liquid and can be converted to cash easily.

Both types of tangible assets can be used as collateral, which allows companies to borrow money. They can be valued using the appraisal method (an appraiser determines their fair market value), the liquidation method (their minimum value if they need to be sold quickly), or the replacement cost method (how much it would cost to replace for insurance purposes).