what is a fixed asset 
a fixed asset is a long term tangible property or equipment a company uses to operate its business fixed assets include buildings computer equipment software furniture land machinery and vehicles companies can depreciate the value of these assets to account for wear and tear fixed assets commonly appear on a company balance sheet as property plant and equipment pp e investopedia laura porteraccounting for fixed assetsa company s balance sheet statement includes its assets liabilities and shareholder equity assets are divided into current assets and noncurrent assets the difference of which lies in their useful lives current assets are typically liquid and can be converted into cash in less than a year current assets include cash and cash equivalents accounts receivable ar inventory and prepaid expenses fixed assets are noncurrent assets that are not easily converted to cash noncurrent assets also include long term investments deferred charges and intangible assets these assets won t be depleted or sold within the accounting period a fixed asset has a physical form and is reported on the balance sheet as pp e companies purchase fixed assets to produce goods or services for office and operating use or to rent to third parties fixed assets are depreciated while current assets are not depreciationfixed assets lose value as they age because they provide long term income these assets are expensed differently than other items tangible assets are subject to periodic depreciation while intangible assets are subject to amortization 1a certain amount of an asset s cost is expensed annually the asset s value decreases along with its depreciation on the company s balance sheet to match its long term value how a business depreciates an asset can cause its book value the asset value that appears on the balance sheet to differ from the current market value cmv land is a fixed asset that cannot be depreciated 1acquisition and disposalthe acquisition or disposal of a fixed asset is recorded on a company s cash flow statement under the cash flow from investing activities the purchase of fixed assets represents a cash outflow to the company while a sale is a cash inflow if the asset s value falls below its net book value it is subject to an impairment write down its recorded value on the balance sheet is adjusted downward to reflect that it is overvalued compared to the market value 2