Long-term tangible assets owned by a business that are used in operations and not intended for sale, such as land, buildings, machinery, vehicles, and equipment.
Fixed assets (also called Property, Plant & Equipment or PP&E) are assets with a useful life exceeding one year that a business uses to generate revenue. They are recorded at cost on the balance sheet and depreciated over their useful life (except land, which doesn't depreciate). Fixed assets are classified as non-current assets. The fixed asset register tracks each asset's purchase date, cost, location, depreciation, and book value. Proper fixed asset management is crucial for tax optimization (depreciation claims) and insurance coverage.
A company buys machinery for ₹20,00,000 with a 10-year useful life and no residual value. After 4 years: Accumulated Depreciation = ₹8,00,000, Book Value = ₹12,00,000. This appears on the balance sheet at ₹12,00,000.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
Fixed assets are long-term (buildings, machinery) used in operations for multiple years. Current assets are short-term (cash, inventory, receivables) expected to convert to cash within one year. Fixed assets are depreciated; current assets are not.
It tracks every asset's cost, location, depreciation, and current value. Required for: accurate depreciation calculations (tax benefits), insurance claims, audit compliance, sale/disposal tracking, and Companies Act 2013 compliance in India.
The systematic allocation of the cost of a tangible asset over its useful life, representing the decline in value due to wear, use, or obsolescence.
A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
Funds spent by a business to acquire, upgrade, or maintain long-term physical assets such as property, equipment, or technology infrastructure.
The gradual write-off of the cost of an intangible asset (like patents, software, or goodwill) over its useful life, or the repayment of a loan in installments.
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