Types of Tangible Assets
Businesses own two types of Tangible Assets, namely,
1. Fixed Assets: Assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment. Fixed Assets are held for longer use and they are not held for conversion into cash within 12 months. Fixed Assets lose their value over time as they incur normal wear and tear. Depreciation is charged on fixed assets as per their usable life or years of economic benefits. However, depreciation is not charged on Land. For example, Machinery, Plant, Property, Building, etc.
2. Current Assets: Assets that are held to be converted into cash within one year are known as Current Assets. Current Assets are not charged with depreciation, also the feature of Physical existence may or may not be presented in Current Assets. They help maintain day-to-day business operations and in financing those business operations. For example, Cash, Inventory, Debtors, Bills Receivable, Marketable Securities, etc.