Define: Fixed Asset

A fixed asset is a long-term tangible asset that is used in the production or supply of goods and services, has a useful life of more than one year, and is not intended for sale.

Examples of fixed assets include land, buildings, machinery, vehicles, furniture, and equipment.

Fixed assets are long-term assets that are not easily converted into cash, while current assets are short-term assets that can be readily converted into cash within one year.

Fixed assets are typically recorded on a company’s balance sheet and are depreciated over their useful life to reflect their gradual wear and tear or obsolescence.

In some cases, small businesses may choose to expense fixed assets instead of depreciating them. However, this is subject to certain limitations and should be discussed with a tax professional.

Yes, fixed assets can be sold or disposed of when they are no longer needed or become obsolete. The proceeds from the sale are typically recorded as a gain or loss on the company’s income statement.

While there may not be specific legal requirements for maintaining fixed asset records, it is generally recommended to keep accurate records for tax purposes, financial reporting, and potential audits.

Yes, fixed assets can be used as collateral for loans. Lenders may require an appraisal of the fixed asset’s value and may place a lien on the asset until the loan is repaid.

Yes, fixed assets can be leased or rented out to generate additional income. However, this may require proper legal agreements and compliance with any applicable regulations.

If a fixed asset is stolen or damaged, it should be reported to the appropriate authorities and insurance company. Depending on the circumstances, the company may be able to file an insurance claim to recover the value of the asset.