what is fixed assets

Fixed assets are long-term tangible assets or property that a company owns and uses in its operations to generate income. They are different from current assets, such as cash or bank accounts, because the latter are liquid assets. Fixed assets are expected to last, be consumed, or be converted into cash after at least one year. Fixed assets are one of two types: freehold assets, which are purchased with legal right of ownership and used, and leasehold assets, which are used by the owner without legal right for a particular period of time. Fixed assets are important for several reasons. They can help a company provide services, goods to customers, and generate revenue. They can also educate creditors and investors on the financial health of a company and indicate that a business may be in a high-growth mode. Fixed assets are subject to depreciation, which accounts for their loss in value over time due to wear and tear. Fixed assets most commonly appear on the balance sheet as property, plant, and equipment (PP&E) .