Accounting, Economy

Types of Fixed Assets

fixed-assetsAlso called “tangible assets”, the fixed assets are used for the business operation, having a price higher than a predetermined
threshold dollar amount when purchased and supposed to last at least one year.

One of the generally accepted accounting principles-materiality-speaks about the importance of an accounting event concerning the financial statements. Companies are allowed to set a threshold price (a few thousand dollars) below which a product won’t appear on the balance sheet at all although it actually is considered a tangible asset. If the company purchases a single product for let’s say $1000, this asset can be recorded as expense on the income statement. On the other hand, if the company acquires 10 such products, they will be recorded as fixtures and furniture on the balance sheet and charged to the budget accordingly.

Representing a substantial investment which pays off in time, we can mention:

1. Land-represents the physical place where a business is operating.

2. Buildings-physical structures in company’s property such as production facilities, warehouses, offices, repair facilities, and more.

3. Lorries and other vehicles-all cars owned by the company.

4. Furniture and fixtures.

5. Equipment and machineries-the production machineries used for products manufacturing, computers, etc…

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