Any organization that uses tangible assets for its day-to-day activities can be said to have fixed assets. What are fixed assets? Examples include land, buildings, tools, and equipment. In accounting terms, fixed assets are usually itemized on the balance sheet as Property, Plant, and Equipment (PP&E).
If it’s your job to determine what fixed assets are for your organization’s accounting purposes, you will want to get familiar with what makes fixed assets different from current assets.
How to Identify Fixed Assets
Use the following checklist in order to determine the difference between an asset and a fixed asset.
1. They Are Useful For More Than One Accounting Period
Fixed assets will always be characterized by a useful life that lasts more than one accounting period, which is usually the same as one fiscal year.
2. They Depreciate Over Time
Fixed assets are subject to wear and tear. That means that throughout their lifespan, they will eventually be worth less than what the organization paid to purchase them. It’s important to track an asset’s rate of depreciation throughout its useful life.
3. They Are Not Liquid
Because fixed assets are long-term investments intended to support business operations on an ongoing basis, they are not easily resold or liquidated. Current assets, however, are assets that businesses expect to use or sell within a year of acquisition. These assets can include cash, accounts receivable, day-to-day supplies, or inventory that’s ready to be sold.
4. They Provide Long-Term Revenue Benefits
Fixed assets are critical to an organization’s day-to-day operations, to the point that it would be very difficult for a company to deliver revenue without them. Whether the assets make employees’ jobs easier, help the business to better serve its customers, or both, they count as fixed.
Put simply, a characteristic of a fixed asset is that it is held for long-term use in the business rather than for resale; it is not easily converted to cash, and it typically loses value over time through depreciation (with land as a common exception). If an item meets all of these tests, it belongs in your fixed asset register.
Examples of Fixed Assets
While fixed assets are often tangible items, there are some cases where assets can be considered both fixed and intangible (more on this below). These are examples of fixed assets and the typical ways that organizations utilize them.
- Vehicles. A shipping company will include its vehicular fleet among its fixed assets. However, a car for personal use doesn’t count as a fixed asset.
- Buildings. An organization that stores inventory would include warehouses among its fixed assets. (But not the inventory kept inside them. Those are liquid, and therefore current assets.)
- Land. If the same company buys land to build warehouses on it, the land also counts as a fixed asset. Keep in mind that land is a fixed asset that isn’t subject to depreciation, as it isn’t expected to lose value over time.
- Machinery. A company that creates a product on the premises with certain tools or machines would count their essential equipment as fixed assets.
- Furniture. Office buildings, schools, and most other organizations rely on furniture like desks and chairs for their employees, which are common fixed assets.
- Software. While it may not be tangible, computer software still counts as a fixed asset for organizations that rely on it for their day-to-day revenue-building activities.
For accounting purposes, all of these example assets can be itemized on the company balance sheet under Property, Plant, and Equipment (PP&E).
Why Tracking Fixed Assets is Important
Once your organization’s fixed assets have been identified, it is vital to carefully keep track of them–and their depreciated value–for accounting purposes.
Effective fixed asset tracking offers a few benefits to your company:
- Cost savings: If you’re unable to locate the fixed assets you need, you’ll likely replace them without a second thought. But with proper asset tracking, you can gain clear visibility into the status, location, and availability of your assets to optimize fixed asset utilization.
- Better decision-making: With effective depreciation tracking, you know when a piece of equipment is getting old and may need to be replaced. Tracking assets means you can predict likely future expenses before they happen and allocate budget accordingly.
- Increased accountability: By tracking the full lifecycle of your fixed assets, including who they’re assigned to and where they’re located, you can enhance accountability throughout your organization if an item becomes damaged or goes missing.
Beyond the above advantages to fixed asset tracking, perhaps the most important benefit is keeping clear audit trails for regulatory and financial compliance purposes. Whether you’re aiming to comply with a new standard or have had inaccuracies on your balance sheet, your organization may be subject to an external audit. All the better reason to clearly track and audit fixed assets internally before an external review.
How to Keep Track of Fixed Assets
Just looking around your organization’s headquarters, you may be able to count hundreds of assets, including desks, chairs, IT devices, or tools. With such a large range of fixed assets, it would be a challenge to keep track of all of that on one overworked Excel spreadsheet.
Many teams also assign each item a fixed asset key (often called a FAK) or asset tag so it can be uniquely identified across locations. A barcode or QR label tied to that key lets staff scan an asset during audits, transfers, and assignments, and every scan is recorded as a movement in the asset history. That running log makes it easier to see where equipment has been, who used it last, and which parts are missing when it is time to repair or replace something.
Classifying your organization’s various assets is vital to ensuring an accurate balance sheet. Once you’ve identified your fixed assets, you can take the guesswork out of managing them with a dedicated asset tracking platform. Asset Panda’s powerful solution allows companies of all industries and sizes to track their fixed assets in real time and manage their full lifecycle history for effortless accounting.
From vehicles to software to furniture, Asset Panda can be customized to manage all your unique assets and workflows in one centralized solution. Add unlimited users to your platform to quickly assign assets to employees and enhance accountability. Plus, manage your assets from anywhere with our companion mobile app and create custom barcode labels for your physical assets using our built-in barcode technology.
Because every organization tracks fixed assets a little differently, the fields on each asset record can be configured to match your process. Fields can be set as text, required, unique, or read-only, so accounting can lock down values like purchase cost or asset ID while operations teams update location, condition, or assigned user. This flexibility helps standardize your fixed asset data without forcing every department into the same rigid template.
If you’re looking for a robust solution to manage all your fixed assets, look no further. Discover how Asset Panda can meet your unique needs and request your personalized demo today.
Frequently Asked Questions About Fixed Assets
What is the difference between a fixed asset and a current asset?
A fixed asset is a long-term resource held for ongoing use in business operations, such as machinery, vehicles, or buildings. It is not easily converted to cash and typically depreciates over time. A current asset, by contrast, is expected to be used, sold, or converted to cash within one year. Examples of current assets include inventory, accounts receivable, and cash on hand.
Is land considered a fixed asset?
Yes, land is a fixed asset. It is a long-term holding that supports business operations and is not intended for resale in the normal course of business. However, land is unique among fixed assets because it does not depreciate. Unlike buildings or equipment, land is generally expected to retain its value over time.
How do you calculate depreciation for a fixed asset?
Depreciation spreads the cost of a fixed asset across its useful life. The most common method is straight-line depreciation, which divides the asset’s cost (minus any estimated salvage value) by the number of years in its useful life. Other methods, such as declining balance or units-of-production, may better reflect how certain assets are actually used. Your accounting team or a qualified professional can help determine the right method for each asset category.
What is a fixed asset register and why does it matter?
A fixed asset register is a complete record of all fixed assets owned by an organization. It typically includes details such as asset description, purchase date, purchase cost, location, assigned user, depreciation method, and current book value. Maintaining an accurate register is essential for financial reporting, audit readiness, and informed decision-making about repairs, replacements, and capital budgeting.
How can asset tracking software help manage fixed assets?
Asset tracking software replaces manual spreadsheets with a centralized, real-time system of record. It allows teams to log asset details, track location and assignment, record maintenance history, and monitor depreciation, all in one place. With features like barcode scanning, mobile access, and configurable fields, a platform like Asset Panda helps organizations reduce losses, improve accountability, and stay audit-ready without the administrative burden of manual tracking.
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