Tangible Asset
Definition
A physical asset, such as land, buildings, plant and machinery, vehicles or inventory. Under IAS 16 and FRS 102 Section 17, property, plant and equipment is carried at cost less depreciation or, where an entity adopts the revaluation model for a whole class of assets, at a revalued amount; land is not depreciated. Cash and receivables are monetary assets and are usually grouped separately, although measures of net tangible assets include them. In the modern economy, tangible assets typically represent a diminishing share of total enterprise value relative to intangibles.
Complementary Terms
Concepts that frequently appear alongside Tangible Asset in practice.
The monetary policy tool by which a central bank purchases financial assets to inject liquidity into the economy, typically lowering interest rates and inflating asset prices. QE periods tend to compress discount rates and elevate intangible asset valuations, making it critical for investors to understand the monetary environment when assessing enterprise value.
The proportion of a company's total assets or total investment that is attributable to intangible assets. A high intangible asset intensity — common in technology, pharmaceutical, and professional services firms — indicates that value creation is driven primarily by knowledge, data, and relationships rather than physical capital.
A ratio measuring the efficiency with which a company uses its assets to generate revenue, calculated as revenue divided by total assets. A higher asset turnover indicates more productive use of the firm's asset base.
A valuation approach that estimates the value of a business by adjusting the book values of all assets and liabilities to their fair values, including the recognition of off-balance-sheet intangible assets that meet IFRS 3 or ASC 805 recognition criteria. The adjusted net asset method is primarily used for asset-holding companies, investment vehicles, and businesses where value resides primarily in the asset base rather than earnings capacity.
An intangible asset that meets the identifiability criteria under IFRS 3 or IAS 38, meaning it is either separable from the entity (can be sold, transferred, or licensed independently) or arises from contractual or legal rights. Identified intangible assets are recognised separately from goodwill in purchase price allocations.
Book value is the net asset value of a company as recorded on its balance sheet — total assets minus total liabilities. The formula is simple: Book Value = Total Assets − Total Liabilities.
The systematic allocation of a tangible asset's cost over its useful life. Depreciation reduces the book value of physical assets such as machinery, vehicles, and buildings on the balance sheet while recording the expense on the income statement.
Intangible assets that are not captured on a company's balance sheet or in traditional accounting frameworks, including internally generated brands, proprietary data, organisational culture, and employee expertise. These often represent the largest source of hidden value in modern businesses.
Related FAQ
What is the difference between tangible and intangible assets?
Tangible assets have physical form: land, buildings, machinery, vehicles and stock. Intangible assets have none: they are identifiable non-monetary assets such as patents, trade marks, software and customer contracts.
Read full answer →What are the main types of intangible assets?
IFRS 3 and ASC 805, the business combination standards, group intangible assets into five illustrative classes: marketing-related, customer-related, artistic-related, contract-based and technology-based. The list is not exhaustive.
Read full answer →What intangible assets are important in the construction and infrastructure sector?
Construction and infrastructure intangible assets include order backlog, framework agreements, pre-qualification credentials, proprietary construction methods, and client relationships built through long-term project delivery.
Read full answer →Put this knowledge to work
Use Opagio's free tools to measure and grow the intangible assets that drive your business value.