The Definition of Fixed Assets

Any tangible item not consumed within one accounting cycle (typically a year) and providing long term utility is referred to as a Fixed Asset. Traditional images include manufacturing equipment, tools, transportation vehicles, buildings and utility related systems (sewage systems, power grids, power plants and dams). In accounting, these assets are recorded to the balance sheet as ‘Fixed Assets’.

Tangible and Intangible – Business Definitions and Use

Tangible and Intangible Meaning

Tangible and intangible are terms with several different meanings.  A lot of well educated folks have a difficult time providing an all inclusive definition.  Someone once described tangible as ‘something that can be burned’.  Well, land is tangible and yet, you can’t burn it.  Actually, in Boy Scouts, we teach the boys to use dirt …

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Lease or Buy

Fixed assets are normal in business operations.  However, financing those assets is the critical issue.  If you buy the asset outright, you tie up capital that can be used to expand operations or keep overall costs low in operating the company.  You can buy the asset paying a down payment and borrowing funds from a …

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Capital Expenditures – IRS Definition

The Internal Revenue Service uses a complex definition to identify capital expenditures (assets).  A capital expenditure is not deductible as an expense in the tax year purchased; the taxpayer or entity must use depreciation, amortization or depletion to obtain deductible value on the entity’s return.  This article is an introduction to the Internal Revenue Service’s …

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The Fixed Assets Section of the Balance Sheet

The fixed assets section of the balance sheet is one of the easiest sections to read and understand.  This article is written to describe and illustrate some simple examples of the fixed assets section.  I am not teaching the reader about the accounting system(s) used for fixed assets or how to calculate depreciation.  This article …

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How to Purchase Equipment for a Restaurant – Planning Phase

Equipment costs for a restaurant can easily consume the gross profit of your business.  The key is to keep the costs low in order to spread the costs appropriately over time.  Purchasing equipment for a restaurant requires planning, researching and using finesse to acquire equipment at the lowest cost possible.  This article is dedicated to …

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Small Business Tax Depreciation – Section 179

irs book

The Internal Revenue Service sets the depreciation allowance based on the Code as promulgated by Congress.  The most commonly referenced section is 179.  This is a form of accelerated depreciation allowing the small business owner the opportunity to take a large expense deduction and reduce their tax obligation immediately.  The maximum allowed deduction is $500,000.  …

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