By Shweta Goyal 
🧠 What Are Fixed Assets?
Imagine you’re starting a business. You rent an office, buy a laptop, install furniture, and purchase machines.
➡️ These aren’t things you consume in one go — they stay with you and help you earn money over time.
These are Fixed Assets.
✅ Fixed Assets are tangible, long-term assets used to generate income, not for resale.
🗂️ Types of Fixed Assets (with Examples)
| Category | Examples |
|---|---|
| 🏢 Buildings | Office space, factories |
| 🏭 Machinery | Manufacturing units, tools |
| 🚗 Vehicles | Cars, trucks, bikes used in business |
| 🪑 Furniture | Chairs, desks, cabinets |
| 💻 IT Equipment | Laptops, servers, networking devices |
| 🛠️ Leasehold Improvements | Interior works on rented premises |
📊 Depreciation: A Key Concept
You don’t expense the entire cost in one year — instead, spread it over its useful life.
💡 Tip:
Different depreciation methods are used:
- Straight-Line Method (SLM) – Equal amount every year.
- Written Down Value (WDV) – Decreasing amount every year.
📈 Why Fixed Assets Are Important
✅ Generate income
✅ Long-term benefit
✅ Used in valuation and funding decisions
✅ Impacts depreciation and tax calculations
🧮 Pro Tip: Assets on your balance sheet improve the net worth of the company — but only when maintained and utilized efficiently!
⚖️ Fixed Assets vs Current Assets
| Feature | Fixed Assets | Current Assets |
|---|---|---|
| Holding Period | Long-term (>1 year) | Short-term (<1 year) |
| Example | Machines, Buildings | Cash, Inventory, Debtors |
| Depreciation | Yes | No |
| Conversion to Cash | Difficult | Easy |
📜 Audit Checklist for Fixed Assets
✅ Physical verification
✅ Depreciation accuracy
✅ Capitalization vs Revenue Expense
✅ Disposal entries
✅ Reconciliation with register
🎯 Real-Life Example
👩💼 A company bought a delivery van for ₹8,00,000 in 2022.
They used it for 5 years, then sold it in 2027 for ₹2,00,000.
They claimed depreciation every year and showed the van in fixed assets.
Upon sale, they recorded capital gain/loss depending on the book value.
🧮 Tools to Manage Fixed Assets
- Excel-Based Fixed Asset Register
- Tally ERP Fixed Asset Module
- SAP / Oracle Fixed Asset Management
- QuickBooks (for SMEs)
Fixed Assets: Journal Entries Table
| 📌 Transaction | 🧾 Journal Entry |
|---|---|
| 🏗️ Purchase (Cash) | Asset A/c Dr. To Bank A/c |
| 🛒 Purchase (Credit) | Asset A/c Dr. To Vendor A/c |
| 📦 Purchase with GST (ITC eligible) | Asset A/c Dr. Input GST A/c Dr. To Vendor A/c |
| 🔧 Installation & Transport | Asset A/c Dr. To Bank A/c |
| ⏳ Depreciation Charged | Depreciation A/c Dr. To Accumulated Depreciation A/c |
| 📉 Transfer Depreciation to P&L | P&L A/c Dr. To Depreciation A/c |
| 💰 Disposal (No Gain/Loss) | Acc. Depreciation A/c Dr. Bank A/c Dr. To Asset A/c |
| 📈 Disposal with Profit | Acc. Depreciation A/c Dr. Bank A/c Dr. To Asset A/c To Profit A/c |
| 📉 Disposal with Loss | Acc. Depreciation A/c Dr. Bank A/c Dr. Loss A/c Dr. To Asset A/c |
| 📊 Revaluation Increase | Asset A/c Dr. To Revaluation Reserve A/c |
| 🔻 Revaluation Decrease | Revaluation Reserve A/c Dr. To Asset A/c |
| 🚫 Impairment Loss | Impairment Loss A/c Dr. To Asset A/c |
| 🏗️ CWIP to Fixed Asset | Fixed Asset A/c Dr. To CWIP A/c |
| 🔄 Exchange of Asset | New Asset A/c Dr. Acc. Depreciation A/c Dr. To Old Asset A/c To Bank A/c |
| 📃 Leased Asset Income (Operating Lease) | Bank A/c Dr. To Lease Income A/c |
Conclusion: More Than Just Numbers on Paper
Fixed assets form the foundation of any growing business — they represent stability, long-term planning, and operational strength. Whether it’s a building, machinery, or a company vehicle, every asset contributes silently to daily productivity.
But owning fixed assets isn’t enough. Proper accounting, timely depreciation, regular maintenance, and smart disposal decisions are crucial for maximizing their value.
As a finance professional or business owner, understanding and managing your fixed assets effectively isn’t just good practice — it’s a strategic advantage.
💬 “Fixed assets may not speak, but they do tell your business story — in balance sheets, in tax savings, and in growth.”
Have questions about asset registers, depreciation schedules, or audit compliance? Let’s connect.