Accounting for Fixed Assets
Financial statements disclose certain information relating to fixed assets. In many enterprises, these assets are grouped into various categories, such as land, buildings, plant and machinery, vehicles, furniture and fittings, goodwill, patents, trademarks, and designs. Fixed Assets are those assets of a business that are of material value, like other assets with relatively permanent life acquired by the enterprise for use in the production or supply of goods or instructed to be used continuously or for administrative purposes and may include items held for the resale or conversion into cash in the ordinary source of business. A fixed asset, also known as long-lived assets or property, plant and equipment, is a term used in accounting for assets and property that may not easily be converted into cash. Fixed assets are different from current assets, such as cash or bank accounts, because the latter are liquid assets. However, there are other long-lived assets that we cannot see such as those are classified as tangible assets. They are Goodwill, trademark. Be it tangible or intangible all fixed assets represent a bundle of future services which are paid for in advance and used subsequently in the process of generating revenue.
Definition of Terms