Fixed assets, also known as Property, Plant and Equipment, are tangible assets that are held by an entity for the production or supply of goods and services, for rentals to others or for administrative purposes. These assets are used for more than one accounting period. Fixed assets are generally not considered as a liquid form of assets unlike current assets. Examples of common types of fixed assets include buildings, land, furniture and fixtures, machines and vehicles.
Examples of general categories of fixed assets are:
• Buildings
• Computer equipment
• Computer software
• Furniture and fixtures
• Intangible assets
• Land
• Leasehold improvements
• Machinery
• Vehicles
Fixed assets are initially recorded as assets, and are then subject to the following general types of accounting transactions:
• Periodic depreciation (for tangible assets) or amortization (for intangible assets)
• Impairment write-downs (if the value of an asset declines below its net book value)
• Elimination (once assets are disposed of)
A fixed asset does not actually have to be “fixed” but it cannot be moved. Many fixed assets are portable enough to be routinely shifted within a company. Thus a laptop computer could be considered as a fixed asset (as long as its cost exceeds the capitalization limit).
Tracking the fixed assets valuation and the corresponding depreciation values is been always challenging for a businessman or any corporate organization.
To make the matter more complicated, in India the company has to follow two different rules or methods for calculating depreciation to derive Net Fixed Asset value. As per IT rules, the values are different whereas ROC rules the calculation changes.
Following are the salient features of Fixed Assets Module
• Fixed Asset Register
• Depreciation calculation methods as per ROC & IT