Accounting Demystified

Chapter 11. Fixed Assets

Fixed assets are also called plant assets or plant, property, and equipment. All of these terms are synonymous. Three common traits of these assets are that they are used in the operation of the business, they last more than one year, and they usually are fairly expensive.

Fixed assets are recorded at cost. All the amounts necessary to get the asset ready for use are included as part of the cost. These amounts commonly include the cost of the item, sales tax, and delivery and installation costs. There will be separate fixed-asset accounts for Land, Land improvements, Leasehold improvements, Buildings, Equipment, Machinery, Furniture, Fixtures, and Vehicles. Some companies choose to combine some of these accounts, using ...