Fixed assets – What are fixed assets?
Definition: Fixed assets are economic resources which cannot be easily liquidated (converted into cash).
Fixed assets also include any assets a company has that are not sold directly to their customers - e.g. motor vehicles, furniture, office equipment, computers, etc.
Depreciation of fixed assetsFixed assets are included in the balance sheet at their initial cost, and then depreciated throughout their useful life until they are sold, replaced or recorded on the balance sheet at their residual value.
The depreciation of a fixed asset is the initial cost less the residual value. It is recorded as an expense since it diminished the value of a company's total holdings.