Fixed Asset is an accounting term for property and equipment which are used in the production and distribution of services. Fixed assets are tangible, long-term assets or properties that are not consumed or easily converted into cash, and are often used in the production of income. According to the Financial Accounting Manual for Federal Reserve Banks, fixed assets have three primary characteristics: “they are acquired and held for the use in operations but not for sale; they should be in long-term use (more than a year); they could be physically possessed.” People do not expect them to be converted into cash or be consumed in daily use. For example, buildings and land are fixed assets, securities and cash are liquid assets. Each state has its own categories of fixed asset, according to Arkansas Code a motor vehicles is a fixed asset.
[Last updated in February of 2022 by the Wex Definitions Team]