Current vs fixed assets
Learn how current and fixed assets differ, how to classify them and how Irish capital allowances apply.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Comparing fixed assets vs current assets comes down to time: current assets turn into cash within about 12 months, while fixed assets stay in use for longer
- Current assets include cash, debtors, stock and prepayments, while fixed assets include vans, equipment, buildings and land
- In Ireland, you claim capital allowances on qualifying fixed assets instead of deducting accounting depreciation for tax
- Classifying each asset correctly gives you accurate accounts and a clearer view of your cash flow
What are current assets?
Current assets are resources your business expects to turn into cash or use up within 12 months. They’re the short-term side of your business assets, and they pay for day-to-day running costs.
Think of them as the fuel in your tank. Take away what you owe in the short term and what’s left is your working capital. Lenders check it to see whether you can pay your bills on time.
Current assets are highly liquid, and their value shifts constantly. It rises and falls as customers pay invoices and you restock your shelves.
Examples of current assets
Most Irish small businesses hold a mix of the same core current assets. Here are the ones you’re likely to see on your own balance sheet:
- Cash and bank balances: money in your accounts plus term deposits maturing within 12 months
- Debtors: invoices customers owe you, also called accounts receivable
- Stock: raw materials and goods you’re holding for sale
- Prepayments: costs paid in advance, such as insurance or next quarter’s rent
- Short-term investments: shares or deposits you plan to cash in within the year
What are fixed assets?
Fixed assets are resources you buy to use in your business for more than 12 months, rather than to resell. If current assets are the fuel, fixed assets are the van itself.
You’ll also see fixed assets called non-current assets, and the physical ones are often grouped as property, plant and equipment. FRS 102 is the accounting standard for the UK and Republic of Ireland, and fixed assets are long-term assets with a useful life of more than one year.
Changes to FRS 102 that mostly apply from 1 January 2026 bring leased assets onto the balance sheet, alongside the equipment you own. Most fixed assets lose value as they age, so you spread their cost over their useful life through asset depreciation.
Examples of fixed assets
Fixed assets vary by industry, but a few types turn up in almost every small business. Here are common examples for Irish small businesses:
- Vehicles: a tradesperson’s van or a company car
- Equipment and machinery: commercial ovens or workshop machinery
- Furniture and fittings: desks and shop fit-outs
- Computer hardware: laptops and servers you’ll use for several years
- Land and buildings: premises you own, such as an office or workshop
- Intangible assets: trademarks and software licences you’ll use for more than 12 months
Key differences between current and fixed assets
The split between fixed assets vs current assets comes down to how long you keep each one and what it does for your business. Here’s how the two compare side by side.
Liquidity
Current assets turn into cash quickly, while fixed assets take time to sell and may fetch less than you paid. That’s why your liquidity ratios focus on current assets.
Usage timeline
Current assets are used up or converted within 12 months, while fixed assets keep working for you for years. A laptop you’ll use for three years is a fixed asset; the printer paper and ink you’ll get through this month count as current.
Depreciation
Fixed assets depreciate as they wear out or date, so you spread their cost across the years you use them. Current assets carry no depreciation; their value moves as you collect debts or sell stock.
Financial reporting
Both types appear on your balance sheet, each under its own heading. The standard Irish format lists fixed assets first, then current assets.
Purpose in business operations
Fixed assets give your business the capacity to operate, while current assets fund daily trading. Your delivery van is a fixed asset; the stock it carries to customers is a current asset.
How to tell if an asset is current or fixed
A few quick questions will settle most classification decisions. Work through these steps each time you buy something for your business:
- Ask how you’ll use it: under the Companies Act 2014, an asset is fixed if you intend to use it on a continuing basis, and current otherwise
- Apply the 12-month rule of thumb: if you’ll sell it or use it up within 12 months, treat it as current
- Consider why you bought it: items bought to resell count as stock, however much they cost
- Record it under the matching heading: post it to the right account in your books so it shows correctly on your balance sheet
- Review it at each year end: if your plans for an asset change, move it to the category that fits
How current and fixed assets appear on your financial statements
Current and fixed assets show up in two main reports, and each tells you something different. One shows what you own on a given date, and the other shows how asset costs affect your profit.
Balance sheet
Your balance sheet is a snapshot of what your business owns and owes. The standard Irish format in the Companies Act 2014 lists fixed assets first.
Current assets follow in the statutory order: stock, debtors (including prepayments), short-term investments, then cash at bank and in hand. Fixed assets appear at cost minus their accumulated depreciation.
For example, if you bought equipment for €10,000 and have recorded €3,000 of depreciation so far, it shows at €7,000.
Profit and loss account
Your profit and loss account shows how asset costs flow into your results. When you sell stock, its cost moves from current assets to cost of goods sold.
Fixed assets reach it gradually through a yearly depreciation charge, which reduces your accounting profit. For tax, you add depreciation back and claim capital allowances instead.
Depreciation and capital allowances in Ireland
For most tangible assets, book depreciation isn’t tax deductible in Ireland. Instead, Revenue gives you tax relief on fixed assets through capital allowances, which work like a standardised tax version of depreciation.
Each type of fixed asset has its own allowance rate. Here’s how the main allowances work for small businesses:
- Plant and machinery:wear and tear allowances of 12.5% a year over eight years, which come off your profit before it’s taxed
- Energy-efficient equipment:a 100% accelerated capital allowance in year one for qualifying equipment on the Sustainable Energy Authority of Ireland’s list, under a scheme that runs until 31 December 2030
- Cars:car capital allowances are based on up to €24,000 for cars emitting up to 140g/km, half that for 141–155g/km and nil above 155g/km; from 1 January 2027, the full €24,000 band narrows to cars up to 120g/km
- Industrial buildings: factories and similar qualifying buildings get an industrial buildings allowance of 4% a year over 25 years
If you’re planning to buy a car for the business, check its emissions before you commit. Land follows its own path: land doesn’t depreciate in your accounts, unlike other fixed assets.
Why classifying assets correctly matters
Putting each asset in the right category shapes both your accounts and your tax return. Here’s what correct classification gives you:
- Accurate reporting: a balance sheet that shows what you own and how quickly you can access it
- Tax compliance: capital allowances claimed on the right assets, keeping your Revenue return accurate
- Better decisions: a clear split between cash free for daily costs and cash tied up in equipment
- Easier audits and lending: accounts your accountant or bank can review quickly
Balancing current and fixed assets in your business
Both types of asset have trade-offs, and the right mix depends on your business. A café needs ovens and a coffee machine, but it also needs cash to pay suppliers each week.
Here’s how the strengths and drawbacks of each type compare:
- Current assets’ strength: cash on hand to cover bills and wages quickly
- Current assets’ drawback: stock and debtors can tie up cash until customers buy or pay
- Fixed assets’ strength: long-term capacity, such as a second van that lets you take on more jobs
- Fixed assets’ drawback: cash locked up for years in something that loses value as it ages
A handy check is your current ratio, which compares current assets with current liabilities. If a big equipment purchase would squeeze that ratio, you could spread the cost or time the purchase for a stronger cash month.
Track your business assets with Xero
When you know which assets are current and which are fixed, you can plan big purchases with confidence and keep your tax claims accurate. Xero helps you categorise assets and manage your fixed assets, with depreciation tracked automatically and a balance sheet ready whenever you need it.
You can also track your stock as it sells and reconcile bank transactions daily, so you see your cash flow in real time. Try Xero today and get one month free.
FAQs on current and fixed assets
Here are quick answers to common questions about classifying your business assets.
Is a car a fixed asset or a current asset?
A car you use in your business for more than a year is a fixed asset. If you’re a car dealer, though, the cars on your forecourt are stock and count as current assets.
Is stock a current asset or a fixed asset?
Stock is a current asset because you expect to sell it or use it up as you trade. In the Irish balance sheet format, the stocks heading also covers raw materials and work in progress, alongside finished goods.
Are fixed assets a debit or a credit?
In double-entry bookkeeping, fixed and current asset accounts normally carry a debit balance. Accumulated depreciation sits in a contra asset account with a credit balance, which lowers the asset’s book value.
Which fixed assets can’t be depreciated?
Land is the main one. When you buy premises, record the land and the building as separate amounts so you depreciate only the building.
Can an asset change from fixed to current?
Yes, if you decide to sell equipment instead of using it, it stops meeting the continuing-use test. You then move it to current assets until it’s sold.
What are the 4 main types of assets?
A common grouping is current, tangible, intangible and financial assets. It mirrors the Irish balance sheet format, which splits fixed assets into intangible, tangible and financial before listing current assets.
Related terms
Learn more about current and fixed assets
.com/ie/accounting-software/run-financial-reports/">Run financial reports
Handy resources
Advisor directory
You can search for experts in our advisor directory
Xero Small Business Guides
Discover resources to help you do better business
Financial reporting
Keep track of your performance with accounting reports
Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.