Glossary

Monday 28 May 2012

Fixed Assets

Fixed assets are items which have a useful life or more than one year e.g. a computer, a machine, van etc.

The asset is recorded in the accounts in the balance sheet item and the costs of the assets is written off against profit by making a depreciation charge in the profit and loss account.

There are two types of fixed assets:

Tangible e.g. machinery, vans, computers, land and buildings

Intangible e.g. goodwill, patents, trade marks

For tax purposes the depreciation charge is not an allowable item but you can claim capital allowances.

This is a complicated area and often the services of an accountant are needed to work out the tax and accounting treatment of fixed assets.