9 Tangible fixed assets and depreciation

‘Nothing lasts forever…’

Arnold H. Glasow, American author

In a nutshell

Tangible fixed assets (TFA) are assets that possess physical substance. Examples include land, property, equipment, motor vehicles, etc.

The term fixed denotes an intention by the company to use the asset within the business over the long term (in excess of one year), i.e. to generate revenues over many years. This is in contrast to current assets like stock, where speed of sale is often considered a key objective (see Chapter 11 Stock).

The cost of using TFA is recognised through depreciation. Depreciation is an accounting expense which attempts to spread the cost of TFA over their life in the business. In effect, it reflects ...

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