Fixed assets are assets that generate income for the company over several accounting periods. They can be depreciable fixed assets (e.g. machinery, equipment or buildings) or non-depreciable fixed assets (e.g. land and investments). Depreciable fixed assets are subject to depreciation, either using straight-line or declining balance methods.
Are fixed assets the same for all companies?
Fixed assets do not mean the same thing for every company. What is a fixed asset for one company may be inventory for another. For example, trailers are usually fixed assets, but if a company sells trailers, they are not used by the company itself and do not generate income over multiple accounting periods — in that case they are treated as inventory. They would then be recorded in inventory rather than as equipment.
Want to know more?
Read more on our blog: Straight-line depreciation vs. declining balance depreciation – what is the difference?
SimplBooks has two guides for adding fixed assets to accounting. Both guides also explain how to record depreciation on fixed assets.
Currently, the software can only generate straight-line depreciation automatically. Declining balance depreciation must be entered manually as accounting entries.
Guides:
- If you had fixed assets before starting to use SimplBooks: Recording existing fixed assets in SimplBooks
- If the fixed asset was acquired while using SimplBooks: Adding New Fixed Assets
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