Property, Plant and Equipment

• A company needs tangible, long-term operating assets to produce and offer services and goods. Tangible operating assets include property, plant and equipment (PPE). These assets are not for sale and are used solely to facilitate operating activities. PPE assets have expected useful lives of more than 12 months, and their value decreases with use. This category of operating assets comprises land and land improvements, such as parking lots, driveways, fences and similar; buildings; vehicles; furniture; and equipment. Property, plant and equipment are typically shown under a common head in financial statements, such as the balance sheet. Property, plant, and equipment are also referred to as fixed assets, capital assets and PPE assets.
  
  

Natural Resources

• Natural resources, or wasting assets, are the rights to consume or extract natural resources. This category of operating assets includes the purchase rights to natural gas, coalfields, petroleum, timber and mineral deposits. Natural resources are depleted with use. For example, the petroleum a company uses to produce electricity is completely consumed in the process.
  
  

Intangible Assets

• Intangible assets are those long-term assets that have no physical or tangible substance. Their value stems from the privileges or rights accruing to their owners, according to the authors of the book “Financial Accounting.” Intangible assets include trademarks, copyrights, franchises and patents. Goodwill, which generates when another company is acquired, is also an intangible asset. The importance of intangible assets is often overlooked, since they cannot be seen or touched. The authors of the book “Financial Accounting” state that despite their lack of physical substance, intangible assets may be the most important assets a company controls or owns.
  
  

Others

• The authors of the book “Corporate Finance” list accounts receivable, marketable securities and inventories as operating assets. All these items support a firm in its daily operations. Accounts receivable is all the debt or money customers owe to a firm. Marketable securities are financial instruments that are easily liquidated and converted to cash. These include marketable equity securities and marketable debt securities. Marketable equity securities represent ownership or shares, such as preferred stock or common stock. Marketable debt securities are debt instruments, such as bonds. Inventories include goods (raw materials and produced goods) that are sources of revenue for a company.