Types of Tangible Assets
· Fixed assets.
· Current assets.
Fixed Assets
This group includes land, buildings, machinery, vehicles, furniture, tools, and certain wasting resources e.g., timberland and minerals.
It is also referred to as PPE (property, plant, and equipment), these are purchased for continued and long-term use in earning profit in a business.
Current Assets
Current assets are cash and other assets expected to be converted to cash, sold, or consumed either in a year or in the operating cycle. These assets are continually turned over in the course of a business during normal business activity. There are 5 major items included into current assets:
· Cash and Cash Equivalents
It is the most liquid asset, which includes currency, deposit accounts, and negotiable instruments (e.g., money orders, cheque, bank drafts).
· Short-term Investments
It includes securities bought and held for sale in the near future to generate income on shortterm price differences (trading securities).
· Receivables
It is usually reported as net of allowance for uncollectable accounts.
· Inventory
The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale.
· Prepaid Expenses
These are expenses paid in cash and recorded as assets before they are used or consumed (a common example is insurance). The phrase net current assets (also called working capital) is often used and refers to the total of current assets less the total of current liabilities.