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Fixed Assets

At the time of commencement of business, the owner of the organization can invest money into the concern as assets. These assets may be current asset and/or fixed asset. Current assets are those which can be converted into cash quickly. But fixed assets are those assets which cannot be converted into cash quickly. Both assets are essential for the successful running of the business. But current assets are maintained in the business in order to operate the fixed assets and carry on the business activities. It is otherwise called as working capital. In the actual sense, fixed assets can be classified into Tangible fixed assets and Intangible fixed assets. Normally fixed assets are utilised for the productive purpose of the organisation. For the purpose of utilisation of fixed assets to the production purpose, certain values of fixed assets are to be reduced. Such reduced value is called depreciation. So depreciation is treated as admissible business expenditure upto a prescribed limit. At the same time, depreciation can be Tangible fixed assets which include a physical form of asset such as plant and machinery, land and buildings, furniture and fittings, replacement of tools, vehicles etc. and Intangible fixed assets which include goodwill, patents, copyright, trademark etc.