Current vs fixed assets
Learn how current and fixed assets differ, where they sit on your balance sheet and how IRAS treats them.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Current assets are short-term resources you expect to turn into cash or use up within 12 months, such as cash in the bank and unpaid customer invoices
- Fixed assets are long-term resources you use to run your business for more than 12 months, such as a delivery van or commercial kitchen equipment
- The Inland Revenue Authority of Singapore (IRAS) doesn’t treat accounting depreciation as a tax deduction and gives capital allowances on qualifying fixed assets instead
- Classifying each asset correctly keeps your balance sheet accurate and supports a correct corporate income tax return
What are current assets?
Current assets are the resources your business owns that you expect to turn into cash or use up within 12 months. They keep your day-to-day operations running.
Current assets make up the working capital you draw on to pay bills and cover unexpected costs. Lenders and investors look at them to judge whether your business can meet its short-term obligations.
Examples of current assets
The current assets you hold depend on what your business does. Here are the most common types Singapore small businesses hold:
- Cash in your business bank account and fixed deposits maturing within 12 months
- Unpaid customer invoices, known as accounts receivable
- Stock held for sale, such as retail products or raw ingredients for a food stall
- Prepaid expenses, such as insurance premiums or rent paid in advance
- Short-term investments you plan to sell within 12 months
What are fixed assets?
Fixed assets are long-term resources your business owns and uses for more than 12 months. You buy them to run your business, rather than to resell them.
On financial statements, fixed assets are also called non-current assets or property, plant and equipment (PPE). Because they wear out, most fixed assets are depreciated over their useful life, which spreads the cost across several financial years.
Examples of fixed assets
Your fixed assets will vary with your industry and how you operate. Here are common examples for Singapore small businesses:
- A delivery van or lorry you use to move goods
- Commercial kitchen equipment for a café or restaurant
- Office furniture and computer hardware
- A warehouse unit or shop space your business owns
Key differences between current and fixed assets
Knowing how current and fixed assets differ helps you record transactions correctly and read your financial reports with confidence. These are the main distinctions.
Liquidity
Liquidity is how quickly you can turn an asset into cash. Current assets are highly liquid, which is why lenders use your current ratio to check whether you can cover short-term debts.
Fixed assets are harder to turn into cash. Selling equipment or property takes time and may not return what you paid.
Usage timeline
You expect to convert or use up current assets within 12 months, while fixed assets serve your business for years. A laptop you use daily for 3 years is a fixed asset; the printer ink you buy each month is a current asset.
Depreciation
Fixed assets lose value as you use them, so you record depreciation as an expense each financial year. Current assets don’t depreciate, because you sell or consume them before they lose meaningful value.
Financial reporting
Current and fixed assets sit in separate sections of your balance sheet. Current assets come first, listed in order of liquidity, and fixed assets appear further down under non-current assets.
This split shows anyone reading your statements your short-term position and your long-term investments at a glance.
Purpose in business operations
Current assets drive your everyday cash cycle: you buy stock, sell it, collect payment and repeat. Fixed assets make that cycle possible, so your delivery van (a fixed asset) carries the stock (a current asset) to your customers.
How current and fixed assets appear on financial statements
Your financial statements show where your money sits and how you’re using it. Current and fixed assets appear in two key reports.
Balance sheet
The balance sheet lists your assets, liabilities and equity at a specific date. Current assets appear first, ordered by liquidity: cash, then accounts receivable, then inventory, then prepaid expenses.
Fixed assets sit below them under non-current assets, recorded at their original cost minus accumulated depreciation. For example, if you bought equipment for S$10,000 and have recorded S$3,000 in depreciation so far, it appears on your balance sheet at S$7,000.
Income statement
Your income statement, also called a profit and loss statement, shows revenue and expenses over a period. When you sell inventory, its cost moves from the balance sheet to the income statement as cost of goods sold (COGS).
Fixed assets reach the income statement through depreciation. Each year, a portion of the asset’s cost is recorded as a depreciation expense, which lowers your accounting profit. For tax, IRAS gives capital allowances in place of depreciation.
How depreciation and capital allowances work in Singapore
Depreciation spreads a fixed asset’s cost across the years you use it in your financial statements. The simplest method is straight-line depreciation: cost minus residual value, divided by useful life.
Say you buy a delivery van for S$40,000, expect to sell it for S$4,000 at the end, and plan to use it for 6 years. Your yearly depreciation is S$6,000, which is S$36,000 divided by 6.
Tax follows separate rules. Under the IRAS capital allowance rules, depreciation in your financial statements isn’t tax-deductible. Instead, your company claims capital allowances for wear and tear on qualifying fixed assets bought and used in the business.
IRAS gives you a choice of write-off periods, plus a quicker route for small purchases. You can:
- write off the cost over 1 year, 3 years or the asset’s prescribed working life
- write off low-value assets costing up to S$5,000 each in 1 year
- claim up to S$30,000 in total for low-value assets per Year of Assessment (YA)
Capital allowances can’t be claimed on private cars, such as S-plated cars. For a van like the one above, the S$6,000 yearly depreciation stays in your accounts, while your tax computation uses the capital allowances you claim.
How to tell if an asset is current or fixed
You can classify most purchases by asking how long you’ll keep them and why you bought them. Work through these four steps whenever you buy something for your business.
1. Check how long you’ll use or hold it
If you’ll sell it or use it up within 12 months, it’s a current asset. If you’ll keep using it for longer, it’s likely a fixed asset.
2. Check why you bought it
Stock you plan to resell and supplies you’ll consume are current assets. Equipment and vehicles you use to run the business are fixed assets.
3. Check whether it’ll give value beyond 12 months
A purchase becomes a fixed asset when it keeps earning its keep after the current year, like an oven that bakes for 5 years. Items you use up quickly, like cleaning supplies, belong in expenses or current assets.
4. Record it and review it each year
Record each asset in the right account, then review your asset list at every year end. If you plan to sell a fixed asset within 12 months, reclassify it as a current asset.
Why classifying assets correctly matters
Getting asset classification right from the start saves you rework at year end. Correct classification helps your business in these ways:
- Keeps your balance sheet accurate, so lenders and investors see your true financial position
- Supports a correct capital allowance claim with IRAS, which doesn’t accept accounting depreciation as a deduction
- Shows your real working capital, so you can decide when to hire staff or invest in equipment
- Makes it easier for your accountant to review your books and file your corporate income tax return
Track current and fixed assets with Xero
Classifying assets correctly shows you what your business can spend now and what it’s investing in for the long term. With Xero, you can manage your fixed assets alongside your everyday accounts, with depreciation calculated for you.
You can also run financial reports whenever you need them, so you always know where your business stands. Try Xero for your business and get one month free.
FAQs on current and fixed assets
Here are answers to common questions small business owners ask about current and fixed assets.
Is a car a fixed asset or a current asset?
A car your business owns and uses for more than 12 months is a fixed asset on your balance sheet. For tax, IRAS doesn’t give capital allowances on S-plated private cars, while vans and lorries used in the business can qualify.
What is the difference between fixed assets and non-current assets?
Fixed assets are one type of non-current asset, and people often use the two terms interchangeably. Non-current assets is the broader category, which also covers long-term intangible assets such as trademarks or goodwill.
Which fixed assets can’t be depreciated?
Land is the main fixed asset you can’t depreciate, because it doesn’t wear out or have a limited useful life. A building on that land does wear out, so you depreciate the building separately.
Can an asset change from fixed to current?
Yes, if you decide to sell a piece of equipment within the next 12 months, you move it to current assets. Assets can also move the other way, for example when a computer retailer takes a laptop out of stock for staff to use.
Is inventory a fixed asset?
No, inventory is a current asset because you hold it for sale. The same item can be either, depending on the business: a van is inventory for a car dealer but a fixed asset for a delivery company.
Are current assets a debit or credit?
Current assets carry a normal debit balance, like all assets. In double-entry bookkeeping, you debit an asset account to record an increase and credit it to record a decrease.
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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.