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Fixed Asset: Definition and Meaning
Definition
A fixed asset is a long-term tangible asset used in business operations, such as machinery, furniture, vehicles, buildings, or equipment.
Why It Matters
Fixed assets are generally not intended for routine resale. Their purchase, financing, depreciation, maintenance, location, insurance, and disposal can all affect financial statements and business planning.
Companies should maintain an accurate fixed-asset register and consider how capital investment affects cash flow, debt, capacity, tax planning, and replacement decisions.
Example
A contractor’s owned equipment fleet, office furniture, and company vehicles may be classified as fixed assets.
Related Terms
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