In accounting, the fixed asset definition or non-current assets definition is a long-term tangible asset. You can also call fixed assets non-current assets, long-term assets, or property, plant and equipment (PP&E). Fixed assets are often large and illiquid physical assets important to a company’s core business operations.
In addition, fixed assets are long-term. That means that the company will hold them longer than one year or one operating cycle. Therefore, a company will not use up the assets or convert them into cash within one year or one operating cycle. Furthermore, fixed assets are tangible; they are physical property, like real estate, buildings, and equipment.
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Record fixed assets on the balance sheet at their net depreciated value. Net depreciated value is purchase price minus accumulated depreciation. The value of a fixed asset will depreciate over its lifespan, and the amount of depreciated value will accumulate on the balance sheet in a contra-asset account that is subtracted from the value of the fixed asset to get its net depreciated value.
Fixed assets, or non-current assets, are in contrast to current assets. Current assets are short-term assets that are expected to be used up or converted to cash within one year or one operating cycle.
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