when the most precise tangible asset value is needed a company often hires an external independent appraiser the appraiser is often an expert in a given field i e an expert in a specific type of collectible or an expert in real estate the appraiser evaluates the condition of the tangible asset as well as incorporating external factors impacting the value 
at the end of an appraisal the appraiser often issues an appraisal report that report outlines the conditions of the asset for properties specific sections will often exist for the interior and exterior conditions the report will note modernization efforts construction quality market conditions and any notable impairments to recognize for the asset one could argue that the value of a tangible is the money it is able to fetch for it in the open market with this reasoning the value of a tangible asset is the liquidation price it would receive should it brought to market regardless of an external appraisal or insurance report a company may treat a tangible asset only worth whatever they can immediately sell it for liquidation price will often be less than an appraiser s value for several reasons first there are usually significant costs that a company may incorporate into the liquidation price second some tangible assets are illiquid and may be difficult to move for this reason a company may be forced to incentivize buyers with substantial pricing discounts that do not property reflect the true value of the building when sold in a normal careful sale process the third type of valuation method is primarily used by insurance carriers as part of a policy insurers generally use replacement cost as the basis for determining what a building is worth for this reason the insurance company will set the policy so in case there is a claim the claimant may receive proceeds to replace their asset not necessarily receiving compensation for the actual full value advantages and disadvantages of tangible assetstangible assets hold real value buildings can be occupied land can be utilized and machinery can be used as opposed to investments or intangible assets real assets hold a purpose beyond their means as an investment for this reason some argue tangible assets make more sense in specific investment climates for example farmland is always in demand as the world continually needs agriculture and food during uncertain investment periods some advisors may claim that this type of tangible asset makes sense to invest in due to the stable use of such an asset in addition the asset class may move entirely differently than the stock market due to being a completely different type of asset by extension tangible assets usually have dual investment opportunity valuation appreciation and operating cash flow consider a commercial office in a favorable downtown location not only is the property value likely increasing the building owner is receiving rent from tenants because tangible property can be used it can generate operating income on top of increasing in value government agencies often have guidance and limitations to what may be considered tangible assets it may also choose to segregate tangible assets by category such as california s state administrative manual 1not everything is perfect for tangible assets though consider the risks to farmland such inclement weather or improper tilling techniques that deplete the arability of the land in addition consider the risk of obsolescence for the building during covid 19 as workers shifted to remote work such offices were left vacated and not needed by companies smaller tangible assets may be an easier target for theft as well the theft of digital assets may require technical knowledge and your actions may still be traceable back to your personal accounts for tangible assets such as inventory illegal ownership is a function of physically possession if a thief can walk out of a store with new headphones they claim ownership of the tangible asset even if it is not rightfully theirs therefore it may cost more to protect store and oversee tangible assets may be more stable investment due to consistent underlying useoften has real world application that increases its valuemay generate cashflow if rented out for usemay have low correlation to other asset classes due to difference in underlying asset profilemay be subject to physical damage via nature or intentional human destruction may become obsolete if more advanced tangible assets are introducedmay be more subject to theft due to potentially easier accessoften requires additional expenses to store manage and protect goodstangible vs intangible assetsasset values are important for managing shareholders equity and the return on equity ratio metric tangible and intangible assets are the two types of assets that makeup the full list of assets comprehensively for a firm as such both values are recorded on the balance sheet and analyzed in total performance management intangible assets include non physical assets that usually have a theoretical value generated by a firm s own valuation these assets include things like copyrights trademarks patents licenses and brand equity value intangible assets are recorded on a balance sheet as long term assets there are some itemized values associated with intangible assets that can help form the basis of their balance sheet value such as their registration and renewal costs generally though expenses associated with intangible assets will fall under general and much of intangible value must be determined by the firm itself intangible assets such as goodwill cannot usually be sold individually in an open market but in some cases they may be acquired from other companies they may also be paid for and transferred as part of an acquisition or merger deal intangible assets do contribute to a firm s net worth and total value if they are recorded on the balance sheet but it is up to the firm to decide on any carrying value can be physically touchedmay have real world use such as consumption or physical utilization