What is a Fixed Asset?

A fixed asset is a long-term property that an enterprise acquires and utilises in the period of its revenue and isn’t predicted that would be utilised or devoured into cash in the upcoming 1 year. An exemplary case of fixed asset is a manufacturer’s plant resources, for instance, its hardware and substructures. The term ‘fix’ signifies that these assets will not be sold out in the existing financial bookkeeping year.

Significance of Fixed Assets:

An elucidated representation of an establishment’s capital sums up to the comprehending of the financial profit and evaluation of that business concern. Information incorporating fixed assets and depreciation is additionally used by financial experts when they are thinking about whether an establishment is a non-profitable or profitable enterprise. While ascertaining the profitable of a fixed asset, the plan of action for depreciation has to be contemplated.

Accounting For Fixed Asset:

If your trading concern has a fixed asset, sound accounting standards can fill in as a standard to perfectly depict these long cargo commodities on the bookkeeping records. Specific exchanges that affect the capital to assimilate the purchase, devaluation, revaluation, and sale of the asset. This business is important to the precision of your trades’ financial data and reports.

Types of Fixed Assets :

  • Tangible Assets: Tangible asset is an asset that has a physical existence. Tangible assets incorporate both fixed assets, such as land, buildings and machinery and current assets – inventory.
  • Intangible Assets: An intangible asset is an asset which doesn’t possess a physical existence. Brand recognition, intellectual property, goodwill and such as copyrights, trademarks, and patents are all examples of intangible assets.

Also Read: Tips to Study Accountancy

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