Fixed Assets

Fixed Assets:

Fixed assets can also be known as property, plant, and equipment (PP&E). This is a term used in accountancy for assets and property which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred to as fixed assets.

Trying to get an accurate financial picture of a company requires accurate fixed assets recording and also a compliance with the relevant tax laws and regulations for acquiring, depreciating and disposing of fixed assets. Fixed assets usually include things such as land, buildings, motor vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and machinery. These often receive favorable tax treatment with regards to depreciation over short-term assets because they depreciate over time. Depreciation errors can result in financial reporting mistakes, risking failure to comply with regulatory requirements

Fixed assets depreciation mistakes are costly. Because fixed assets represent such a significant investment for most companies, mistakes in fixed asset management can have negative consequences. The most important function of fixed assets management is to ensure that depreciation is calculated correctly for all fixed assets. Fixed assets represent the majority of capital investments for most companies and can account for 35-50% of Fortune 500 companies’ total assets. With this much at stake, it is imperative that fixed assets are managed with solid procedures, best practices, and optimal technology.