Contents
1. What is a fixed asset?
2. How do fixed assets and inventory differ?
3. What are some fixed asset types?
3.1. Computer equipment
3.2. Furniture and fixtures
3.3. Machinery
3.4. Vehicles
4. What is fixed asset accounting?
5. International Financial Reporting Standards: An overview
6. What records does my fixed asset accounting require?
6.1. Procurement
6.2. Depreciation
6.3. Impairment
6.4. Disposal
6.5. Audits
7. Best practices for fixed asset accounting
7.1. Establish a threshold for capitalization
7.1. Ensure your assets have tags
7.2. Automate your insights
7.3. Choose the right depreciation method
7.4. Get insured and record it
8. Conclusion
1. What is a fixed asset?
Fixed assets are long-term tangible pieces of property. Companies use these assets in their daily business operations to generate an income. Often referred to as the ‘capital’ of the business, fixed assets include items such as machinery and plant equipment.
Their defining feature is that they are not converted into cash in the first year of acquisition. Firms tend to invest in fixed assets for the following objectives:
- Act as rentals for third parties
- Use them in regular organizational workflows
- Enable the production or supply of business goods and services