What defines Fixed Assets in a business?

Fixed assets are defined as items that a business owns and uses in its operations for a significant period, generally longer than one year. This classification includes tangible assets such as property, buildings, machinery, and equipment, as well as intangible assets like patents and trademarks. The key characteristic of fixed assets is that they are not intended for immediate sale or consumption; instead, they are utilized to generate revenue over time.

This long-term perspective differentiates fixed assets from current assets, which are expected to be converted into cash or used within a year. By understanding the nature of fixed assets, businesses can manage their resources effectively and plan for future growth and capital investments. Therefore, identifying fixed assets accurately is crucial for financial reporting, taxation, and strategic planning within the business.