Tangible & Intangible Assets

Tangible & Intangible Assets

Businesses are known for possessing tangible and intangible assets. The difference between tangible and intangible assets is very simple. Tangible assets are physical forms that provide value to a business such as machinery, vehicles, and natural resources. Intangible assets consist of nonphysical forms that also provide value to a business such as contracts, copyrights, trademarks, goodwill, and patents. Intangible assets cost money to possess and are not easily accessed to purchase and sell. Financial statements for a business or organization occasionally report intangible assets as "other assets".

Entries Associated with Plant Assets

Plant assets are assets that decline in value over their useful lives. Property, plant, and equipment are known as plant assets. The entries associated with the acquisition of plant assets are to record the asset at cost and includes any costs incurred to make the asset ready for its intended use. The debits increase and the credit decreases. Retirement, sale, or exchanges are ways to dispose of assets. To record the disposal of plant assets, the book value is found by using the difference between the cost of the asset and the accumulated depreciation. The entries debits decrease under Accumulated Depreciation and the credits decrease the asset account for the cost of the asset. The sale of the plant asset determines the book value of the asset. A sale that exceeds the book value is a gain on the disposal. A sale less than the book value are a loss on disposal. A company that sales a plant asset for a gain records in the "Other revenues and gains" section of the income statement. A loss is in the "Other expenses and losses" section of the income statement.