Fixed assets
Learn what fixed assets are, how to record and depreciate them, and how Irish capital allowances work.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Fixed assets are long-term items your business owns and uses to earn income, such as equipment, vans, machinery and premises
- Irish company accounts split fixed assets into intangible, tangible and financial assets, and most tangible ones lose value through depreciation
- In Ireland, capital allowances let you claim tax relief on qualifying purchases, usually at 12.5% a year over eight years for plant and machinery
- A fixed asset register helps you plan replacements and meet Revenue’s six-year record-keeping requirement
What are fixed assets?
Fixed assets are long-term items your business owns and uses to earn income, such as equipment, vans, machinery and premises. You buy them to use over several years rather than to sell on.
In accounting, tangible fixed assets are also called property, plant and equipment. They sit under non-current assets on your balance sheet, alongside any long-term intangible and financial assets.
Picture a small bakery. Its ovens and delivery van are fixed assets, while the flour and the day’s loaves are stock. If you expect to use an item for more than one year, it’s usually a fixed asset.
Why fixed assets matter for your business
Your fixed assets show how much you’ve invested in your business’s long-term capacity. Their value shapes your balance sheet and can affect how much a lender is willing to offer you.
For Irish small businesses, fixed assets also affect your tax bill, because Revenue disallows accounting depreciation and gives capital allowances instead. Getting the accounting right early saves time when you file your tax return.
Types of fixed assets: tangible, intangible and financial
Irish company accounts group fixed assets into three categories. Under the Irish company balance sheet format, fixed assets split into:
- tangible assets, which are physical items such as land, buildings, machinery, vehicles and computers
- intangible assets, which have no physical form, such as goodwill, patents, trade marks and software licences
- financial assets, which are long-term investments such as shares in, or loans to, related companies
This glossary focuses on tangible fixed assets, the equipment and property you use day to day. You can read more about patents, goodwill and similar items in the guide to intangible assets.
Key characteristics of fixed assets
Some purchases count as fixed assets and others go straight to expenses. Four characteristics help you tell them apart.
Long useful life
A fixed asset gives you economic benefit for more than one accounting period, which usually means more than 12 months. A laptop you’ll use for three years is a fixed asset, while this week’s printer paper is an expense.
Held for use in your business
You buy fixed assets to use them in your business. A delivery van that carries your goods is a fixed asset. For a car dealership, though, the cars on the forecourt are stock, because they’re there to be sold.
Capitalised and depreciated
When you buy a fixed asset, you capitalise the cost, which means the purchase price goes onto your balance sheet as an asset. You then spread that cost over the asset’s useful life through depreciation, matching the expense to the periods when the asset earns income.
Slow to turn into cash
Selling machinery or a building takes time and effort, while collecting an invoice or drawing on your bank balance is quick. That’s why fixed assets sit in the non-current section of your balance sheet.
Examples of fixed assets
Your fixed assets depend on your industry and how you trade. These are the most common categories you’ll come across:
- land your business owns and uses, which usually isn’t depreciated because it doesn’t wear out
- buildings such as offices, warehouses, workshops and shops you own
- vehicles such as vans, company cars and lorries used in your operations
- machinery and equipment for manufacturing, construction or production
- computer equipment, including laptops, servers, printers and networking hardware
- office furniture and fittings, such as desks, chairs, shelving and lighting
- specialist tools, measuring devices and diagnostic equipment
- leasehold improvements that add lasting value to premises you rent
Which items you capitalise depends on your capitalisation threshold. You’ll find more on setting one in the section on managing fixed assets.
Fixed assets vs current assets
Your balance sheet splits assets into two main groups: fixed (non-current) assets and current assets. Knowing the difference helps you read your accounts and judge how your money is working.
Current assets are items you expect to use up, sell or turn into cash within 12 months. They include cash, stock, trade debtors and prepayments.
Fixed assets are the long-term items you rely on for more than a year. Current asset balances tend to move month to month, while fixed assets stay on your balance sheet and lose value gradually through depreciation.
Strong current assets point to good short-term liquidity. Substantial fixed assets show investment in long-term capacity, and most healthy businesses need both.
How fixed assets are recorded on the balance sheet
Recording fixed assets correctly keeps your accounts accurate and your tax claims easy to support. Here’s how it works when you buy an asset and in each reporting period after.
Capitalising the cost
When you buy a fixed asset, you record the full cost on your balance sheet instead of your profit and loss statement. The cost includes the purchase price plus anything needed to get the asset ready, such as delivery and installation.
Net book value and accumulated depreciation
Fixed assets appear under non-current assets at their net book value, which is the original cost minus depreciation to date. That running total is called accumulated depreciation, and it sits against the asset’s cost so your balance sheet shows its current carrying value.
Are fixed assets a debit or credit?
Fixed assets are debit balances, because assets increase with a debit in double-entry bookkeeping. Each stage of an asset’s life has its own journal entry:
- when you buy the asset, debit the fixed asset account and credit your bank or the supplier
- at the end of each period, debit depreciation expense and credit accumulated depreciation
- when you sell or scrap it, credit its cost, debit its accumulated depreciation and debit your bank for any proceeds
Any difference left over is a gain or loss on disposal, which goes to your profit and loss statement.
Leased assets under FRS 102 from 2026
Financial Reporting Standard 102 (FRS 102) is the accounting standard used in the UK and Republic of Ireland. For accounting periods beginning on or after 1 January 2026, lessees recognise most leases on the balance sheet as right-of-use assets plus lease liabilities.
That means a van or machine you lease can now appear on your balance sheet alongside the assets you own. Short-term and low-value leases are exempt, and your accountant can help you check which of your leases this covers.
How fixed assets are valued: cost vs revaluation model
Once an asset is on your balance sheet, you need a consistent way to measure it. There are two main approaches.
The cost model is the simpler one. You carry each asset at what you paid, minus accumulated depreciation and any impairment. The figure only moves when you record depreciation or impairment.
The revaluation model carries an asset at its fair value on the date you revalue it, minus depreciation and impairment since then. It can suit property whose market value has risen, but you’ll need regular valuations to keep the figures current.
Your accountant can confirm which model suits your business. Sticking with one approach makes your figures easier to compare year on year.
Depreciation of fixed assets
Depreciation spreads the cost of a fixed asset over its useful life. Instead of expensing the full price when you buy, you recognise part of it in each period the asset is in use.
Why depreciation matters
Depreciation makes your accounts reflect the true cost of running your business each period. Without it, profit would look low in the year you buy an asset and high in the years after.
Common depreciation methods
You can calculate depreciation in several ways. These are the three you’re most likely to use:
- straight-line depreciation, which charges the same amount each year across the asset’s useful life
- reducing balance depreciation, which applies a fixed percentage to the remaining book value, so the charge is higher in early years
- units of production depreciation, which links each period’s charge to how much you use the asset
With straight-line, a machine costing €10,000 with a five-year useful life and no residual value would be depreciated at €2,000 per year. If you expect the same machine to make 100,000 units, units of production gives a charge of €0.10 for every unit it makes.
Reducing balance suits vans and technology that lose value fastest when they’re new. Choose the method that best matches how each asset wears out in practice.
Land and buildings bought together
When you buy premises, split the price between the land and the building. You depreciate only the building portion, and the land stays at cost.
Depreciation and Irish tax: capital allowances
Capital allowances take the place of depreciation when you work out your taxable profit. They follow rates set by Revenue, whatever depreciation method you use in your accounts.
For plant and machinery, wear and tear allowances are 12.5% a year over eight years. Accelerated capital allowances (ACA) give a 100% first-year allowance on new, owned equipment on the Triple E register. That register belongs to the Sustainable Energy Authority of Ireland (SEAI), and the ACA scheme runs until 31 December 2030.
Cars follow emissions-based limits, with allowances spread over the same eight years at 12.5% a year. If your car emits up to and including 140g/km of carbon dioxide (CO2), you claim allowances on a €24,000 limit, even if it cost less. For 141–155g/km, you get the lower of half that limit or half the car’s cost, so €12,000 at most.
Allowances stop above 155g/km. Finance Act 2024 lowers these thresholds for spending from 1 January 2027. From then, the €24,000 limit covers cars up to 120g/km, and cars at 121–140g/km move to the €12,000 cap. Anything over 140g/km gets no allowance, so check a car’s emissions before you buy next year.
The fixed asset lifecycle
Every fixed asset follows the same path, starting when you buy it and ending when you dispose of it. Knowing each stage helps you manage costs and plan ahead.
Acquisition
The lifecycle starts when you buy the asset and add it to your balance sheet at full cost. At this point, you also set its useful life and choose a depreciation method.
Use and maintenance
While it’s working, the asset earns its keep in your day-to-day operations and you record depreciation each year. Regular maintenance extends its useful life, and improvements that add life or capacity can be capitalised too.
Review and impairment
Review your fixed assets regularly to confirm their book values still hold up. If damage or obsolescence pushes an asset’s value well below its book value, you may need to record an impairment loss.
Disposal
When an asset reaches the end of its life, you sell it or scrap it and clear it from your books. For tax, a balancing allowance or charge arises when you dispose of plant or machinery that has claimed allowances.
Your sale proceeds are compared with the asset’s tax written-down value. Higher proceeds give a balancing charge, and lower proceeds give a balancing allowance.
Fixed asset management for small businesses
Tracking fixed assets takes a little structure, and it pays off at year end. Good records give you a clear view of what your business owns and what it’s worth.
Keeping a fixed asset register
A fixed asset register lists every fixed asset your business owns. For each one, record its description, purchase date, cost, depreciation method, useful life and current net book value.
Your register and the invoices behind it count as business records. Revenue requires you to keep original records for six years.
Setting a capitalisation threshold
A capitalisation threshold is the minimum cost an item needs before you record it as a fixed asset. Anything cheaper goes straight to expenses, which keeps your register focused on items worth tracking.
Agree a threshold with your accountant and apply it consistently, so similar purchases get the same treatment each year.
Spotting ghost and zombie assets
Ghost assets are items on your register that you can’t find, because they’ve been lost or scrapped without a record. Zombie assets are the reverse: equipment you still use that’s missing from the register or already written off.
Both give you an inaccurate balance sheet and can throw off your capital allowance claims. A yearly physical check, matching each item against the register, brings them to light.
Tracking depreciation
Recording depreciation each period keeps your accounts accurate. Fixed asset software can calculate it for you, which replaces manual spreadsheet updates and keeps your balance sheet current.
Planning for replacements
Knowing how much useful life each asset has left lets you budget for replacements before they’re urgent. This matters most for expensive items like vans and machinery, where a sudden breakdown could disrupt your work and your cash flow.
Claiming Irish capital allowances
Wear and tear allowances let you deduct 12.5% of the cost of plant and machinery each year for eight years. Accelerated capital allowances give 100% relief in year one on qualifying energy-efficient equipment.
Before you buy equipment, check whether it’s on the Triple E register. Then note the allowance each asset qualifies for in your register, so your accountant can prepare your claim quickly.
Manage your fixed assets with Xero
Accurate fixed asset records help you decide when to invest, when to replace and how much tax relief to claim. Xero keeps your asset register, depreciation and reports in one place, with bank feeds keeping the numbers behind them up to date.
Your accountant can work in the same books in real time, and you’ll spend less time on admin and more time running your business. See how Xero fits your business and get one month free.
FAQs on fixed assets
Here are quick answers to more questions about fixed assets.
Is inventory a fixed asset?
Inventory is a current asset, because you hold it to sell. If you take an item out of stock to use in your business long term, such as a display unit, it becomes a fixed asset.
How are intangible fixed assets treated in your accounts?
Intangible fixed assets, such as software licences or patents, are usually amortised rather than depreciated. Amortisation works much like straight-line depreciation, spreading the cost evenly over the asset’s useful life.
Can fixed assets increase in value?
Land and buildings can rise in market value over time. Under the cost model, that increase stays off your balance sheet until you sell and record a gain on disposal.
How do you calculate net fixed assets?
Take the total original cost of your fixed assets and subtract total accumulated depreciation and any impairment. For example, €50,000 of equipment with €20,000 of accumulated depreciation gives net fixed assets of €30,000.
What is a fixed asset register used for?
It’s your evidence for the capital allowances you claim, and you may need to provide it during a Revenue compliance check or audit. Because wear and tear claims run for eight years, it’s sensible to keep an asset’s purchase records until six years after your final claim.
Related terms
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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.