A fixed asset represents a long-term asset utilized by a company in its operations. Upon purchase, the company records the fixed asset on its balance sheet and gradually depreciates it throughout its useful life.
The tangible book value of a fixed asset denotes the net saleable amount after deducting associated liabilities and considers asset depreciation. It's instrumental in assessing a company's fixed assets and evaluating its financial well-being.
Fixed assets, which aren't intended for sale and form part of a company's operations, can include intangible elements beyond the physical asset itself, such as the value of a company's name or trademark. This value is usually determined by an appraiser and contributes to the fixed asset's total cost.
Tangible book value measures the physical assets of a company that can be touched, while intangible book value encompasses assets like trademarks and copyrights, which are non-physical and often challenging to quantify.
Fixed assets are vital for a company's operations, serving long-term purposes and not intended for sale. Examples include land, buildings, and equipment, all recorded on the balance sheet at cost, less any accumulated depreciation.
