Fixed Asset

Fixed Asset is tangible piece of property that a business entity owns and uses in

operation to generate income. It is not expected to be consumed or converted into cash within one year's time. In general, asset that cannot be converted into cash within one year is known as Fixed Asset while on the other hand, asset that can be converted into cash within one year is known as Current Asset. For instance, cash and bank account.

Fixed Asset normally include items such as land and buildings, motor vechicles, furniture, office equipment, computers and plant and machinery. Hence, Fixed Asset also known as Property, Plant and equipment (PP&E).

For most cases, Fixed Asset will be depreciated thru out the financial period as the expense generated by the use of an asset.Depreciation is usually spread over the useful life of the Fixed Asset because it is considered as expense of the asset over its useful life.For examples, if a fixed asset are expected to have 10 year of economic useful life, the value of the fixed asset will be depreciated every year and it will become zero value after 10 year of depreciation.