Fixed asset

Definition

A fixed asset, also known as a tangible or non-current asset, refers to a long-term, physical asset held by a company for use in its operations and not intended for sale in the normal course of business.

What are fixed assets?

Fixed assets are vital for a company’s day-to-day operations and are not expected to be converted into cash within one year. 

Examples of fixed assets:

  1. Property, plant, and equipment (PPE): This category includes buildings, land, machinery, vehicles, and other physical assets used in the production process.
  2. Furniture and fixtures: Items like office furniture, fixtures, and equipment that are necessary for business operations.
  3. Intangible assets (in some cases): Some are classified as fixed assets if they have a finite useful life and meet specific accounting criteria. 

Fixed assets play a direct or indirect role in revenue generation. For instance, machinery in a manufacturing plant directly contributes to production, while an office building indirectly supports the organisation’s operations.

Fixed assets are subject to depreciation, which is the systematic allocation of their cost over their estimated useful life. This process reflects the gradual wear and tear or obsolescence of the asset.

Fixed assets are a significant component of a company’s financial position and are disclosed in the balance sheet. The accurate valuation and proper accounting of fixed assets are crucial for financial reporting and analysis.

Example of fixed assets

Company ABC, a manufacturing company, has the following fixed assets on its balance sheet as of December 31:

  1. Land: R500,000 – The land on which the company’s manufacturing facility is situated.
  2. Buildings: R2,000,000 – The manufacturing plant and office buildings owned by the company.
  3. Machinery: R1,200,000 – Specialised machinery used in the production process.
  4. Vehicles: R300,000 – Delivery trucks and other vehicles used for transportation.

The total value of fixed assets on Company ABC’s balance sheet is R4,000,000.

Ready to grow your business?

Clever finance tips and the latest news

Delivered to your inbox monthly

Join the 95,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

Our offices:

Disclaimer: Swoop Finance helps South African firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. We can introduce you to a panel of lenders, equity funds and grant agencies. Whichever lender you choose we may receive commission from them (either a fixed fee of fixed % of the amount you receive) and different lenders pay different rates. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop Finance (Pty) Ltd is registered with CIPC in South Africa (company number 2023/820661/07, registered address 21 Dreyer Street, Cape Town, South Africa, 7708).

© Swoop 2025

Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop