fixed asset

In accounting, fixed assets are tangible items owned by a company that are permanent or long-term in nature. These assets, such as land, buildings, machinery, and equipment, are crucial for a business's operations. Unlike current assets, which are easily converted to cash, fixed assets are intended for long-term use.12

As fixed assets age, they lose value through a process called depreciation. Depreciation is the systematic allocation of an asset's cost over its estimated useful life. This accounting practice accounts for wear and tear, age, and obsolescence, but not for sudden losses due to accidents or disasters. On a balance sheet, accumulated depreciation is subtracted from the original cost of a fixed asset to show its net book value. Land is an example of a fixed asset that is not depreciated.234