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.
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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