Business Dictionary

Fixed Assets

What are Fixed Assets?

Fixed assets are properties or objects of value that are not expected to be used by the business owner within a fiscal year. They are used in the day-to-day activities of the business to generate income. Also, other names for fixed assets include tangible assets or long-lived assets.

In accounting, fixed assets appear on the balance sheet as Property, Plant, & Equipment (PP&E). As a business owner, you have to understand fixed assets depreciate over time due to wear and tear.

However, not all fixed assets depreciate. An example of such fixed assets is land. Generally, lands appreciate and are therefore not calculated with depreciation costs.

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Fixed Assets – Examples

Business owners must know the examples of fixed assets to differentiate them from other assets like current and non-current assets. Examples of fixed assets include:

  • Buildings
  • Land
  • Computer Hardware
  • Computer Software
  • Machinery
  • Furniture
  • Office Equipment
  • Tools
  • Vehicles

Related Terms

Kindly note, fixed assets can be either freehold assets or leasehold assets.

  • Freehold Assets are long-term assets bought by the business owner alongside the legal rights to own the asset. That means you purchased the asset (land, equipment e.t.c) with your capital and own it till you stop using it.
  • Leasehold Assets are tangible assets used by the business within a stipulated time of agreement but without legal rights. This scenario happens when a business lacks the capital to purchase the asset, so the business owner opts for the lease option. Once the stipulated time lapses, the business owner either renews the lease agreement or stops using the asset.

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