Wednesday, January 14, 2009

What is Fixed Assets?

All those assets which are purchased not for the purposes re-sale them and its service life are of longer duration. All assets are fixed assets which have the following silent characteristics:
• More or less permanent in nature
• Used in business operation
• Not held for the purpose of re-sale

Fixed assets are classified as under:
1. Tangible Fixed Assets: The examples are given below;

Plant & Equipment: land, building, machinery, tools, delivery equipment, office equipment and fixture. All the items are subject to depreciation with the exception of land, which is not depreciated in books.

Natural Resources: mines, timber tracts, oil and gas wells. These are subject to depletion.

2. Intangible Fixed Assets: The examples are given below:

Copyright, patents, etc. which have no physical existence but have got use-value. They are amortized over their expected useful life.

Goodwill and Trademarks are usually not subject to amortization, but to revaluation.

The cost of fixed assets includes purchases price plus all expenses incurred in connection with its acquisition and making it in a useable condition.

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