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What is a fixed asset?

Fixed asset

A fixed asset is an item of property that is used in company operations to generate income.

Fixed assets are usually buildings or equipment and are long term assets they typically won’t be converted into cash for a year or more.

Where have you heard about fixed assets?

Fixed assets are also known as property, plant, and equipment (PP&E). If your company uses buildings, machinery or vehicles for its operations, the cost of these assets will be shown on your balance sheet under 'fixed assets'.

What you need to know about fixed assets.

Fixed assets don’t have to be literally ‘fixed’, like buildings or large pieces of machinery, but take their name from the fact that they remain on a company’s balance sheet for a long period of time.

As well as buildings or equipment, fixed assets include tangible assets such as land and vehicles, and intangible assets such as trademarks and patents.

Fixed assets are recorded on company balance sheets as their net value, which is their original cost minus depreciation. They start losing value as soon as they are bought, so the older a fixed asset, the greater the depreciation. This devaluation is reflected in financial reporting to ensure accurate costs.

Find out more about fixed assets.

Read our definition of liquid assets, which are the opposite of fixed assets.м

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