In the financial context of a company, fixed assets are those assets that the company uses continuously during the normal course of its operations and that will represent the set of services that will be received in the future throughout life. useful of an acquired good.
Meanwhile, for an asset to be plausible to be considered as the fixed asset of a company, it must meet or meet the following characteristics: be physically tangible, have a relatively long useful life, at least greater than one year, its benefits must extend for at least one year or a normal cycle of operations, be used in the production or commercialization of goods and services, either for be rented to third parties or for administrative purposes, this means that the asset exists for the purpose of being used in the operations of the company on a continuous basis and not to be used for sale in what would be the normal course of business.
To further clarify the issue, it is better to give an example that better illustrates the concept, a truck will be the fixed asset of a company, as long as it is used only for the transport and delivery of merchandise that it sells, but In a company that sells transportation, that same truck will be part of its inventory and will be used for sale, therefore it would not correspond in this case, due to its purpose, to a fixed asset of the company.
Although, as we mentioned above, fixed assets have a considerable duration in time, they are not eternal either, then, it is for this reason that accounting will force to depreciate the goods as time passes, because unfailingly the use, the wear and tear that comes from the activity that they hold and also fashion, which sometimes makes things look old, will contribute to the loss of value of a good.
Therefore, what the accounting work in question indicates is to carry out a long-term amortization of expenses, for which there are tables and special depreciation and amortization methods that are dedicated to this. Through these alternatives, the value of the asset is reduced and it will be reflected as an expense and the prepaid expense will be applied in the corresponding period.
