WHAT IS A FIXED ASSET?

Define Fixed Asset?

Fixed Asset are assets that are not easily converted into cash like land, buildings, equipment, vehicles, machinery, furniture, fixtures that lasts longer than a year and generates revenue.

What is Fixed Asset in more detail?

Fixed Assets are items that are tangible and not liquid or cannot be easily converted into cash. This is expected to be owned for more than a year or more.  Fixed assets are being purchased to use for a long period of time.

If fixed assets has reached the end of its useful life, it will be disposed by selling it or if cannot be used anymore then it will be obsolete or no market value. It’s value loses as they age because they provided long term income. Fixed Assets can be divided into two, depreciation and tangibility.

Depreciation assets can also be divided into two, depreciable and non-depreciable assets.

Depreciable assets are assets which are depreciated during its useful years. An examples are vehicle, plant and machinery, building, etc. Non-depreciable assets are assets which are not depreciated during its useful time like Land.

Tangibility can be divided into two, tangible and non-tangible assets. Tangible assets are assets which can be seen and touched like building, vehicle, etc. Non-tangible assets are assets which cannot be seen and touched like patent, copyright, etc.

 

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