Fixed assets are resources purchased for long term use in the business and are not likely to be sold for cash within 12 months.
Fixed assets are typically used by a business to generate income. They may also be referred to as property, plant and equipment and recorded like that on a balance sheet.
1. Fixed assets are generally tangible, physical things that have a useful life of more than one year.
2. They provide long-term financial benefit to the business and aren’t sold to customers.
3. They’re regarded as being illiquid in that they can’t easily be converted into cash within a year.
4. Fixed assets are subject to depreciation to account for the loss in value as the assets are used (with the exception of land).
Fixed assets are a type of non-current (long-term) asset along with intangible assets and long-term investments.