Fixed assets are tangible assets that a company plans to use for a long term in its business operations. These assets are not easily converted into cash and are not expected to be sold during the normal course of business. Instead, they play a critical role in the functioning of the company by serving operational needs and contributing to revenue generation.

Examples of fixed assets include machinery, buildings, vehicles, and furniture. For instance, a company may own a company vehicle to facilitate staff travel or a factory building to house manufacturing equipment. Fixed assets are recorded on the balance sheet under non-current assets.

These assets often undergo wear and tear over time, which is accounted for through depreciation. Depreciation spreads the cost of the asset over its useful life, reflecting its declining value and remaining utility. Understanding fixed assets and their depreciation is crucial for accurate financial reporting, long-term planning, and control of business resources.