Definition
Fixed assets are assets a business holds to use over the long term and not to sell, such as property, equipment and vehicles. They are shown on the balance sheet separately from current assets.
The three kinds
| Type | Examples |
|---|---|
| Tangible fixed assets | Land and buildings, plant and machinery, vehicles, computers, fixtures and fittings |
| Intangible fixed assets | Purchased goodwill, patents, licences, software development costs |
| Fixed asset investments | Shares in subsidiaries and other long-term investments |
How they are accounted for
The cost of a fixed asset is not charged to the profit and loss account when it is bought. It goes on the balance sheet and is written off over its useful life through depreciation, or amortisation for an intangible asset. The balance sheet shows the net book value: cost less depreciation to date.
Fixed or current
What matters is how the business uses the asset. A van is a fixed asset for a builder but stock, a current asset, for a van dealer.
Read more: The tangible fixed assets note, The intangible fixed assets note and The fixed asset investments note.