What are fixed assets?

Fixed assets (definition)

Fixed assets are resources purchased for long term use in the business and are not likely to be sold for cash within 12 months.Fixed assets are also known as non-current and long-term assets. They may also be referred to as property, plant and equipment. They are assets intended to be used within the business, not sold or converted to cash.

Fixed assets are typically used by a business to generate income. They may also be referred to as property, plant and equipment and recorded like that on a balance sheet.

Key characteristics of fixed assets

1. Fixed assets are generally tangible, physical things that have a useful life of more than one year

2. They provide long-term financial benefit to the business and aren’t sold to customers

3. They’re regarded as being illiquid in that they can’t easily be converted into cash within a year

4. Fixed assets are subject to depreciation to account for the loss in value as the assets are used (with the exception of land)

Fixed assets are a type of non-current (long-term) asset along with intangible assets and long-term investments.

What are examples of fixed assets?

Fixed assets can include buildings, computer equipment, software, furniture, land, vehicles and machinery owned by the business.

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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.