What are fixed assets?
Fixed assets are property put into service. They include anything from a new phone to an automobile to a building. Land is a fixed asset even though you state its value separately from the structures on it. Sometimes it is difficult to tell if a repair or small appliance is an asset, improvement, or a cost of doing business. A close inspection can determine the correct accounting treatment. Fixed assets also include physical items acquired in your business that are used year after year. A service life of the item is established to compute depreciation, which is expensed as a cost. The benefit of owning such an item is that you realize its value over its expected life. This more reasonably approximates its economic value. It also allows for properly stated asset value, income, budgets and tax calculations. You should keep invoices for fixed assets in a safe place and avoid mixing them up with general payables.
