A fixed asset is assets of a company that do not change during the fiscal year, these assets cannot be modified in the short term and are usually necessary for the activities of the company and are not available for sale. An example of fixed assets, is the building where production is maintained since it corresponds to the company and is maintained throughout the process of producing and selling their products. Also included in fixed assets are investments in stocks, securities produced by affiliated companies and bonds.
During depreciation and liquidation, the value of the asset decreases and manifests itself as a lower expense. The expenses paid in advance are fixed in the time that concerns, it is important to emphasize that the assets are the rights of the company.
We can say that fixed assets are classified into three branches:
- Acquisitions in companies.
- Tangibles, components that are manipulated such as buildings, machinery, land, among others.
- Intangibles, this includes objects that cannot be materially manipulated such as patent rights, among others.
Fixed assets may occasionally be written off or sold, either because they are obsolete or because they are replaced by technological advancement. The useful existence of fixed assets is the period of utility that is given in the company until it is no longer necessary for the company. There are some elements that intervene in the useful life of a fixed asset such as: the time and the use that is given to the equipment or machinery causing wear and tear and deterioration of the same, or that is of obsolete technology causing inability to work effectively.
On the other hand, the useful time of a fixed asset can be said to be the period for which a service extends from which an organization expects to obtain assets, said period of time can be expressed in different ways, the most frequent being in years, however it can be represented in any measure, be it hours, kilometers, etc. Some of the elements that can be variable in the useful life of an asset are physical elements, these include the impairment caused by the use of said assets and that caused by other factors related to their age. The so-called functional factors also intervene, this includes the impossibility of producing correctly, either because it has become obsolete or for other reasons, preventing the growth of the company.
