Fixed assets are long-term tangible assets used in the operations of a business and not expected to be consumed or sold within a year. Examples include property, plant, and equipment.
5 Must Know Facts For Your Next Test
Fixed assets are recorded on the balance sheet under non-current assets.
Depreciation is applied to fixed assets to allocate their cost over their useful life.
Land is a fixed asset but is not depreciated because it typically appreciates in value.
Impairment occurs when the carrying amount of a fixed asset exceeds its recoverable amount.
Fixed assets can be financed through various means, including loans or capital leases.
Review Questions
Where are fixed assets recorded on the financial statements?
What accounting process is applied to allocate the cost of fixed assets over time?
Why isn't land depreciated like other fixed assets?