What is fixed asset?

What Does fixed asset Mean

The etymology of the word active leads us to actīvus , a word from the Latin language. The term can be used as a noun or as an adjective : in this case we are interested in its meaning as a noun, naming the good or the right that has a financial value and that is owned by a subject or a company.

Fixed , on the other hand, is an adjective that can be used to qualify what is established according to certain parameters or norms or what is established, consolidated or does not vary.
With these ideas clear, we can advance in the definition of fixed assets . The notion refers to the financial or economic asset that does not undergo changes in the fiscal year or during the operating cycle of an entity. These assets are recorded in the accounting statement of a company , in the credit column .

It is important to establish, in addition to what has already been indicated, that there are several types of fixed assets. Thus, we come across exactly three:

-Intangibles, which refer to things that cannot be physically touched, as would be the case, for example, of a trademark patent. In addition, this set also includes copyrights, franchises, permits, licenses ...

-The tangibles, which are those that can be touched. In this case, we would be referring to vehicles, real estate, machinery, tools ... In the same way, in this group we can include computer equipment, technical installations, furniture, merchandise ...

-Fixed assets that are presented in the form of investments in what are affiliated companies.
Take the case of the shed where a transport company keeps its vehicles. This is a fixed asset of the company since, while it develops its services , it remains under the ownership of the company without registering changes. In this way, the fiscal years can pass without the shed undergoing modifications that alter its value.
Those assets that do change throughout an operating cycle are called current assets . Returning to the previous example, the sheets of paper that the transport company acquires to print receipts and receipts are current assets and not fixed because said sheets are modified and distributed within the framework of the firm's activity .
It is important to establish, in addition to what has already been indicated, that there are several types of fixed assets. Thus, we come across exactly three:

-Intangibles, which refer to things that cannot be physically touched, as would be the case, for example, of a trademark patent. In addition, this set also includes copyrights, franchises, permits, licenses ...

-The tangibles, which are those that can be touched. In this case, we would be referring to vehicles, real estate, machinery, tools ... In the same way, in this group we can include computer equipment, technical installations, furniture, merchandise ...

-Fixed assets that are presented in the form of investments in what are affiliated companies.

In addition to what is indicated, it is relevant to have knowledge of another series of data about fixed assets in general, such as the following:

-They have a useful life, which is the time during which the company in question makes use of the same.

-In that aforementioned useful life, they can influence from technological obsolescence to time passing through the usefulness they have.

-When accounting for fixed assets, it is necessary to look at aspects such as the initial cost.

-There may be the possibility that the aforementioned assets are subject to depreciation, which can be defined as the process consisting of what is the allocation of the cost of the asset to expenses according to what is its original cost.

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