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A fixed asset, also known as long-lived assets or property, plant and equipment (PP&E), is a term used in accounting for assets and property that may not easily be converted into cash. [1] Fixed assets are different from current assets, such as cash or bank accounts, because the latter are liquid assets. In most cases, only tangible assets are ...
An asset depreciation at 15% per year over 20 years. In accountancy, depreciation is a term that refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the ...
Long-term investments are to be held for many years and are not intended to be disposed of in the near future. This group usually consists of three types of investments : Investments in securities such as bonds, common stock, or long-term notes; Investments in fixed assets not used in operations (e.g., land held for sale)
An asset's initial book value is its actual cash value or its acquisition cost. Cash assets are recorded or "booked" at actual cash value. Assets such as buildings, land and equipment are valued based on their acquisition cost, which includes the actual cash cost of the asset plus certain costs tied to the purchase of the asset, such as broker fees.
The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. [4] Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity.
Income is a short term inflow during the fiscal year. Expense is short term outflow during the fiscal year. An asset is a long term inflow with implications extending beyond the financial period and by the traditional view could represent unclaimed income. Alternatively, an asset could be valued at the present value of its future inflows.
The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting. The trial balance , which is usually prepared using the double-entry accounting system , forms the basis for preparing the financial statements.
Fixed assets acquired and long-term debts incurred by a capital project are assigned to the government's General Fixed Assets and Long-Term Debts. Debt service funds are used to account for money that will be used to pay the interest and principal of long-term debts. Bonds used by a government to finance major construction projects, to be paid ...