Fixed assets are resources that a company expects to use for more than one year. They support daily operations and help generate revenue. Because these assets have long lifespans, companies record them on the balance sheet at their purchase cost and gradually reduce their value over time through depreciation.
Examples of fixed assets include manufacturing equipment, office buildings, storage facilities, and company vehicles. These assets are not meant for resale in normal business operations—they are tools that help the company function. The value of fixed assets often represents a major part of a company’s total resources and can affect long-term planning and investment decisions.
Tracking fixed assets helps companies understand maintenance needs, depreciation schedules, replacement timelines, and overall financial stability. Since these assets lose value gradually, accurate reporting ensures financial statements reflect the true condition and usefulness of the company’s resources.
Fixed assets support the core operations of a business. Understanding their value helps investors and managers assess long-term efficiency, capital needs, and future investment requirements.
Fixed assets are listed under “property, plant, and equipment” (PP&E) at their original cost, minus accumulated depreciation. This shows how much of the asset’s value has been used over time. The net amount helps investors understand the remaining useful life of the asset. Companies also disclose major asset purchases, disposals, and impairments in their notes.
Depreciation accounts for the natural wear, aging, and reduced usefulness of assets over time. It spreads the cost of the asset across its expected life instead of recording the entire cost in one period. This provides a clearer picture of operating expenses and helps match the expense to the revenue the asset helps generate. Depreciation methods differ based on how the asset is used.
Companies monitor maintenance schedules, replacement cycles, and operating efficiency. They track the condition of major assets to avoid costly breakdowns and unexpected expenses. Capital expenditure (CapEx) budgets are planned based on which assets need upgrading or replacing. Effective management ensures long-term productivity and reduces risk.
A manufacturing company buys a $2 million machine expected to last 10 years. The machine appears on the balance sheet under PP&E, and the company depreciates it each year to reflect its declining value. Regular maintenance keeps it operating efficiently until it needs replacement.
FinFeedAPI’s SEC API provides financial statement data that includes PP&E values, depreciation, and asset disclosures, helping users track long-term asset changes and analyze a company’s capital structure.
