In a manufacturing business, your assets help you run operations, produce goods, and grow over time. But not all assets are the same. Some you can touch and feel. Others are invisible, but still valuable.
These are called tangible and intangible assets. Understanding the difference between them helps you make better financial decisions, track value, and stay compliant with accounting standards.
Let’s break down what makes tangible and intangible assets different, and why it matters for your business.
Tangible assets are physical things your business owns. These include equipment, buildings, land, and inventory. You can touch them, see them, and use them in your daily operations.
Factory machinery
Trucks and delivery vehicles
Office furniture
Raw materials and inventory
Buildings and warehouses
Tangible assets usually wear out over time, which is tracked through depreciation.
Intangible assets are non-physical items that add value to your business. These can include your brand name, trademarks, customer lists, and software.
Patents or copyrights
Brand recognition
Trademarks
Licensing agreements
Business goodwill
Proprietary software or processes
Though you can't see or touch these items, they can play a big role in your company's long-term success.
| Feature | Tangible Assets | Intangible Assets |
|---|---|---|
| Physical Form | Yes | No |
| Can Be Touched or Moved? | Yes | No |
| Value Over Time | Depreciates | May amortize or stay the same |
| Accounting Treatment | Tracked through depreciation | Tracked through amortization or impairment |
| Examples | Machines, tools, land | Software, trademarks, customer lists |
Tangible assets exist in the real world. You can walk into your factory and see your machines. Intangible assets, like your brand reputation, aren’t visible—but they still hold serious value.
Learn more about asset-driven value in: Maximize Your Return on Invested Capital (ROIC) in Manufacturing
Tangible assets are often used daily in manufacturing—like machines or delivery trucks. Intangible assets, on the other hand, often support operations behind the scenes (like software or patents).
Both types help create value but in different ways.
Tangible assets lose value over time due to use and wear. This is called depreciation. Intangible assets are tracked through amortization or impairment (if their value drops suddenly).
Need help understanding how to record asset values? Read: What is GAAP and Why is it Needed
Both asset types appear on your balance sheet. Tangible assets are usually part of fixed assets. Intangible assets often show up under long-term assets.
Understanding these helps you make smarter decisions around financial forecasting and budgeting.
Tangible assets are easier to sell because they have a clear resale market. Intangible assets are harder to sell or price unless they have legal protections, like a patent.
This matters when preparing to sell your business or raise funding.
Both tangible and intangible assets are important. One gives your business the tools to operate. The other can set you apart from competitors.
By understanding the difference, you can:
Track value more accurately
Improve your asset strategy
Boost investor and lender confidence
Want help managing your business assets? Talk to the experts at Accounovation and see how your assets can work harder for you.