In a nutshell
A fixed asset is a long-term tangible piece of property or equipment that a company owns and uses in its operations to generate income. Fixed assets aren’t expected to be sold for cash within 12 months.
- Office building – used by employees for work.
- Warehouse – used to produce goods.
- Computers – used to run the business.
- Furniture – used in the office.
- Vehicles – used to deliver goods.
Key characteristics of fixed assets
- Physical things
- Useful for more than 12 months
- Not directly sold to a firm’s consumers
- Can’t easily be liquidated into cash
- Typically depreciate with time