Tangible

Tangible means it must have physical characteristics. Therefore items such as patents or research and testing do not pass the test due to a lack of physical existence. In accounting terminology, these are referred to as intangibles and are recorded in a different class of assets. Examples of tangible items include tools, site development costs (pavement, curbing, light poles, even trees), structures and trucks.

Tangible and Intangible – Business Definitions and Use

Tangible and Intangible Meaning

Tangible and intangible are terms with several different meanings. A lot of well educated folks have a difficult time providing an all inclusive definition. Someone once described tangible as ‘something that can be burned’. Well, land is tangible and yet, you can’t burn it.  Actually, in Boy Scouts, we teach the boys to use dirt to put out fires! But the best overall definition for these terms that I heard was a synonymous statement made by a Supreme Court Justice when trying to define pornography in relation to art. He said something along the line of ‘I don’t have a definition, but I just know it when I see it’. Basically the gray area for the definition is vast. This is true for these two terms because there are various levels of definitions related to their respective use.  

There is the classic college textbook definition.  It is straight forward, but it doesn’t really begin to get involved in the gray area definitions.  Then there is the more extended definition as used in accounting and customarily in the traditional business setting.  Really getting into higher thinking and use of the terms comes into play when discussing value.  Finally, there is the relationship to each other with regards to economics and the evolving concept of wealth.  They are similar to the theory of the Yin and the Yang of life itself.  

The Definition of Fixed Assets

Any tangible item not consumed within one accounting cycle (typically a year) and providing long term utility is referred to as a Fixed Asset. Traditional images include manufacturing equipment, tools, transportation vehicles, buildings and utility related systems (sewage systems, power grids, power plants and dams). In accounting, these assets are recorded to the balance sheet as ‘Fixed Assets’. 

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