What is a fixed asset?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
A fixed asset is a physical item a business owns and keeps to use in running the business over the longer term, rather than to sell to customers. Examples include tools and equipment, vehicles, furniture, computers, fit-out and land or buildings. On a balance sheet, fixed assets are shown separately from current assets.
What makes an asset fixed is how the business uses it, not what it is. A van used for deliveries is a fixed asset for a plumber, but the same van on a car dealer's lot is stock for sale. Fixed assets are also physical: goodwill or intellectual property is an intangible asset, a separate group.
In the books, a fixed asset usually has its own asset account in the general ledger, rather than being recorded as an everyday expense. A business can also keep an asset register, a list showing each item, when it was bought, what it cost and where the purchase records are kept. How a fixed asset is treated in the accounts after that is a question for your accountant.
In Australia
business.gov.au defines a fixed asset as a physical asset used in running a business. Its balance sheet template describes fixed assets as long-term assets a company owns and uses in its operations, and lists leasehold, property and land, vehicles, equipment and tools, and furniture and renovations.
Its record keeping guidance includes records of all expenses related to your assets or stock among the records a business needs to keep.
Its guidance on improving cash flow notes that assets such as vehicles, equipment or property can cost a lot, and suggests leasing or hiring an asset you only need for a short time and selling assets you no longer need to free up cash.
Worked example
| Asset | Date bought | Cost (AUD) |
|---|---|---|
| Delivery van | 14 Aug 2025 | 38,500.00 |
| Laptop computers | 3 Feb 2026 | 4,200.00 |
| Shop counter and shelving | 20 Mar 2026 | 6,750.00 |
| Total | 49,450.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Recording a large equipment purchase as an everyday expense without asking your accountant how it should be treated.
- Keeping no list of fixed assets, so items that have been sold, lost or scrapped stay in the books.
- Counting stock held for sale as a fixed asset.
Related terms
Related service
Small business bookkeeping
Your books kept current, every month.
Sources
- Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Set up a balance sheet
business.gov.au, Australian Government. Current at 15 October 2026, released 18 January 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Record keeping
business.gov.au, Australian Government. Current at 15 October 2026, released 7 November 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Improve your cash flow
business.gov.au, Australian Government. Current at 16 October 2026, released 20 May 2025. Checked 16 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.