A fixed asset is a long-lived, tangible item a business owns and uses to generate income, such as equipment, vehicles, machinery or buildings.
Fixed assets (also called capital or non-current assets) are not held for resale, they are used in operations over several years. Because their benefit spans many periods, their cost is capitalised on the balance sheet and expensed gradually through depreciation for accounting and capital cost allowance for tax.
The distinction between a fixed asset and an immediate expense matters: a $50 stapler is an expense, but a $5,000 machine is a fixed asset deducted over years. Misclassifying capital purchases as current expenses is a frequent CRA adjustment.
A landscaping company's fixed assets include its trucks, mowers and trailers. Each is capitalised and deducted over time through its CCA class, rather than written off entirely in the year of purchase.
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