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What is a Fixed Asset?
A fixed asset, also known as a tangible asset or property, plant, and equipment (PPE), is a type of asset that a business acquires to use in its operations with the expectation of using it for an extended period of time, typically beyond one year. Fixed assets are not intended for immediate resale; they are used to generate income or provide a long-term benefit to the business.
The common types of fixed assets include:
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Land: The physical ground or property a business owns.
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Buildings: Permanent structures used for business operations, such as offices, factories, warehouses, and stores.
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Machinery: Equipment and machinery used in production, manufacturing, and other operational activities.
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Vehicles: Includes company-owned vehicles used for transportation, delivery, or other business purposes.
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Furniture and Fixtures: Includes items like desks, chairs, shelves, and other fixtures that are used in business premises.
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Equipment: General equipment used in the business, such as computers, printers, and other electronic devices.
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Intangible Assets: While not physical, intangible assets like patents, copyrights, trademarks, and goodwill are considered fixed assets because they provide long-term value to the business.
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Leasehold Improvements: Changes made to leased properties to accommodate the tenant’s specific needs, often paid for by the tenant but considered an asset of the lessee.
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