Fixed asset

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A fixed asset, also known as long-lived assets or property, plant and equipment (PP&E), is a term used in accounting for assets and property that may not easily be converted into cash.^[1] Fixed assets are different from current assets, such as cash or bank accounts, because the latter are liquid assets. In most cases, only tangible assets are referred to as fixed.

While IAS 16 (International Accounting Standard) does not define the term fixed asset,^[2] it is often colloquially considered a synonym for property, plant and equipment. According to IAS 16.6, property, plant and equipment are tangible items that:

(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and

(b) are expected to be used during more than one period.

Fixed assets are one of two types:

• Freehold Assets: assets which are purchased with legal right of ownership and used, and
• Leasehold Assets: assets used by owner with temporary ownership rights for a particular period of time.

A fixed asset can also be defined as an asset not directly sold to a firm's consumers or end-users.