Fixed assets

Fixed assets are found at the top of a company balance sheet. The phrase covers all assets that the business intends to keep for more than a year. So these are operational assets, such as buildings, vehicles and machinery, rather than trading assets. Fixed assets can also be divided into ‘tangible’ (assets you can kick) and ‘intangible’ to cover other long-term assets, such as goodwill, patents and brands. Both types are written off against profits as they get used up or wear out. For tangibles, this is ‘depreciation’; for intangibles, ‘amortisation’. So if a firm buys a van for a salesman for £50,000, expected to make roughly equal amounts of revenue over five years, profits will be charged with £10,000 each year.

Merryn

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