What are pure fixed assets?

Pure fixed assets represent the historical costs of the company, less accumulated depreciation. The historical cost of assets is the actual costs paid by the company. Companies record this information to reflect the amount of fixed assets owned and used to produce profits. Accumulated depreciation is the costs that represent the annual use of each solid asset. Rather than reducing the historical cost of asset, accumulated depreciation is a contra-account used for this purpose. The plant and equipment are two groups with related depreciation; Assets may or may not have depreciation. Land owned by the company will not be depreciated and therefore historical costs should remain the same. The only land change comes from the accounting of Mark-to the market. Buildings or equipment in the property category will certainly have depreciation, which will lead to a net value for this classification of assets.

companies can use a number of different depreciation methods to determine clean fixed assets. Among the most common metalODY Depreciation is a straight line with a straight line and a double decreasing. The calculation of the line is historical costs, less rescue value divided by life. The double decreasing methods are occupied by a predetermined percentage of use and there are more at historical costs. The following years reduce the costs of previous years and calculate the new value for the current year.

Accountants use a basic record in the log to record the calculated depreciation. The record will be debit depreciation and accumulated depreciation. This provides information necessary for calculating net fixed assets. Each account in the log item is located on a separate line in the balance sheet. The accountants will have to create the value of the net fixed assets by the balance sheet and the calculation of the information separately.

Parties are often interested in the company's net fixed assets because this number represents the real value for the company. Discovering contains items that PThey are going to determine the parties to the parties to participate. The basic calculation for economic wealth is total assets, fewer total obligations. Pure fixed assets will reduce this value with the age of assets and become worthless. When fixed assets reach their rescue value, companies will have to replace or risk increased maintenance costs.

depreciation costs also reduce the company's tax liability. Each month recorded depreciation reduces net income. Companies only receive this advantage from depreciation associated with fixed assets.