Fixed assets are long-term physical resources that are used in a business to produce goods or services. They are also known as tangible assets or property, plant, and equipment (PP&E). Fixed assets are typically expected to have a useful life of more than one year and are not intended for resale. Fixed assets are long-lived assets that cannot be easily converted into cash.
Examples of fixed assets include land, buildings, machinery, and vehicles. They are generally acquired for the purpose of producing goods or providing services to customers, and are not typically consumed or sold in the normal course of business.
Fixed assets are important for businesses because they can be used to generate revenue and profits over a long period of time. They are also a key source of collateral for borrowing and financing, and can be used as security for loans and other types of debt.
However, fixed assets also come with costs, including acquisition costs, maintenance costs, and depreciation expenses. It is important for businesses to carefully manage their fixed assets and to ensure that they are being used effectively and efficiently. This may involve tracking the condition and performance of fixed assets, conducting regular maintenance and repairs, and disposing of assets that are no longer useful.