FIXED ASSET Meaning and
Definition
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A fixed asset is an item of property, plant, or equipment held by a business for long-term use or revenue generation purposes. It is typically tangible and has a useful life that extends beyond a year. Fixed assets are often necessary for a company's operations and are not intended for sale or conversion into cash in the normal course of business.
Examples of fixed assets include land, buildings, vehicles, machinery, office equipment, and furniture. These assets are recorded on a company's balance sheet at their initial cost, which includes all expenditures related to their acquisition, such as purchase price, transportation costs, and installation fees. Fixed assets are not expensed in the year of purchase but are depreciated or amortized over their estimated useful lives to allocate their cost over time.
Fixed assets play a vital role in a company's operations, enabling it to produce goods or provide services efficiently. They contribute to a company's ability to generate revenue and can also be used as collateral for obtaining financing. Proper management of fixed assets includes regular inspections, maintenance, and periodic revaluations to ensure their continued usefulness and accurate accounting representation.
Given their long-term nature, fixed assets are subject to specific accounting rules and regulations, including those related to depreciation methods, impairment testing, and disclosure in financial statements. Their value and condition are often monitored closely by stakeholders such as investors, lenders, and regulators to assess a company's financial health and ability to meet its obligations.
Common Misspellings for FIXED ASSET
- dixed asset
- cixed asset
- vixed asset
- gixed asset
- tixed asset
- rixed asset
- fuxed asset
- fjxed asset
- fkxed asset
- foxed asset
- f9xed asset
- f8xed asset
- fized asset
- ficed asset
- fided asset
- fised asset
- fixwd asset
- fixsd asset
- fixdd asset
- fixrd asset
Etymology of FIXED ASSET
The term "fixed asset" has a straightforward etymology. It is derived from two words:
1. Fixed: The word "fixed" comes from the Latin word "fixus", meaning "fastened" or "attached". In English, it refers to something that is stable, not subject to change, or securely positioned in place.
2. Asset: The word "asset" comes from the Middle English word "asseet" or "aset", which in turn originated from the Old French word "assez", meaning "enough" or "sufficient". It refers to a valuable or useful item or property owned by an individual or an organization.
Thus, the term "fixed asset" essentially refers to a long-term tangible or intangible property that is permanently attached or securely positioned and holds value or utility for its owner.
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