What is Fixed Asset?

A Fixed Asset is a long-term tangible asset that a company owns and uses in its operations to generate income. These assets are not expected to be consumed or converted into cash within one year. Examples include land, buildings, machinery, vehicles, and computer equipment.

For Startups: The purchase of a fixed asset is recorded as a Capital Expenditure (CapEx), not an operating expense. The asset is recorded on the balance sheet, and its cost is then systematically expensed over its useful life through a process called depreciation. For a startup, managing its fixed assets is important for accurate financial reporting and tax compliance.

Example: A D2C startup purchases a delivery van for ₹8 Lakhs. This van is a fixed asset. It will be recorded on the balance sheet and depreciated over its useful life, for instance, over 8 years.