Fixed Assets Examples
Typically fixed assets are those assets which the company plans to use on a long-term basis – technically speaking at least for a year. Typically fixed assets are labeled as the PPE (Property Plant & Equipment). What normally fall into this category of assets are the buildings, equipment ranging from factory machinery to computers, land, the plant premises, etc.
The fixed assets are not considered as part of the inventory. The products created by the company would become the inventory as these are assets expected to be converted into cash in the coming months. Thus fixed assets have their cash value but the intent is not to encash this value.
Fixed assets are in some sense true long-term assets of a company. Critical assets which are so core to the operations like the buildings, equipment, machinery and business vehicles that can not be liquidated.
The value of the Fixed assets keeps depreciating and hence the value too decreases. The overall value is provided by the metric Net Fixed Asset calculated as below:
Net Fixed Assets = Total Fixed Assets – Accumulated Depreciation
Lesser the value of Net Fixed Assets older the assets one owns, this becomes important in deals like an M&A, where the other business is interested in a stake due to the perceived value owned by the company.