Fixed Asset
A long-term tangible asset used in business operations, such as buildings or machinery.
Fixed assets (also called PP&E) are long-term tangible resources used in operations for more than one year, such as buildings, vehicles, and equipment. They are recorded at original cost and reduced through depreciation over time. Capital expenditures to acquire or improve fixed assets are significant commitments requiring ROI evaluation.
Example
A printing company purchases a commercial printer for $25,000, recorded as a fixed asset and depreciated over 7 years at $3,571 per year.
Why It Matters for Your Business
Fixed assets often represent the largest investments on your balance sheet, so tracking them properly ensures accurate statements and maximizes depreciation tax deductions.
Practical Tips
- •Maintain a fixed asset register with purchase dates, costs, useful lives, and depreciation methods.
- •Tag physical assets with asset numbers for easy tracking during audits.
Related Terms
More Accounting Terms
Accounts Payable
Money owed by a business to its suppliers or creditors for goods or services received but not yet paid for.
Accounts Receivable
Money owed to a business by its customers for goods or services delivered but not yet paid for.
Accrual Accounting
An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.
Asset
Any resource owned by a business that has economic value and can provide future benefits.
Balance Sheet
A financial statement showing assets, liabilities, and equity at a specific point in time.
Related Financial Guides & Resources
Automate Your Finances with AI
FiscalInsights uses AI to automate bookkeeping, track expenses, and forecast cash flow — so you can focus on your business.
Start Free Trial