Accounting
Fixed Asset
A long-lived physical asset used in the operation of the business — equipment, vehicles, buildings, computers.
Definition
Fixed assets sit on the balance sheet and are depreciated over their useful lives. Accurate fixed-asset records matter for depreciation, insurance coverage, and the eventual sale of the business.
When It Matters
Anytime you purchase, sell, or dispose of meaningful equipment or property.
Common Questions
What counts as a fixed asset vs. an expense?
Generally items with a useful life over a year and a cost above your capitalization policy threshold (often $2,500 under the IRS de minimis safe harbor).
R · Related Terms
Depreciation
Spreading the cost of a long-lived asset over its useful life rather than expensing it all in year one.
Balance Sheet
A snapshot at a single point in time of what a business owns (assets), owes (liabilities), and the owners' equity in it.
Accounts Payable (AP)
Money your business owes to vendors and suppliers for goods or services already received.