Tangible and intangible assets
Assets are everything a company owns. Tangible assets are physical; they include cash, inventory, vehicles, equipment, buildings and investments. Intangible assets do not exist in physical form and include things like accounts receivable, pre-paid expenses, and patents and goodwill.
To understand the value of an asset, it’s important to understand its potential long-term benefits. Often, intangible assets are of greater long-term value than tangible assets because tangible assets are used up more quickly. For example, the patent for a new technology could continue to generate money for decades, while the products based on that patent might have value in inventory for only a short time.
More about tangible and intangible assets
The balance sheet below shows how ABC Company values its various assets.