Like all assets, fixed assets represent legal claims to ownership of property that will give rise to a future cash flow benefits for the organisation that owns them.
Fixed assets are those legal claims to own property by a reporting entity which are likely to give rise to a cash flow benefit wholly or partially more than twelve months after the accounting reference date of that reporting entity in contrast to current assets which are likely to give rise to a benefit in less than twelve months.
Fixed assets can be split between:
- Tangible assets, which represent physical property such as land and buildings, machinery, vehicles, IT equipment and the like.
- Intangible assets, which represent legal claims to own potential income streams such as investments, royalties, copyrights and goodwill.
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