Naming your Fixed and Other Asset accounts is the second part of step three in setting up the Chart of Accounts in bookkeeping . According to dictionary.com, the word fixed can mean: fastened, attached, or placed so as to be firm and not readily movable; firmly implanted; stationary; rigid. Therefore a fixed asset in bookkeeping describes something tangible that the business owns that will be in the possession of the business for years to come.

Leasehold Improvements are improvements made to property that is not owned buy the business. The business cannot depreciate the building or space it is leasing, but can depreciate improvements made to and attached to the leased space, such as lighting, carpeting, cabinetry, walls, etc. Leasehold Improvements are treated differently than other fixed assets when doing depreciation.

Tools & Equipment/Machinery tracks assets owned by a business to perform its services or manufacture its products or conduct its business affairs. This could include office equipment such as computers and copiers, or manufacturing equipment for example. The cost of depreciation and repairs are recorded in different accounts (depreciation allowance and repair expense). This account records the original cost of the tools and equipment.

Automobiles/Vehicles is for those vehicles that are owned by the business. The cost of depreciation and repairs are recorded in different accounts (depreciation allowance and repair expense). This account records the original cost of the vehicle.

Buildings owned by the business.

Land owned by the business. (Remember that land is not depreciable.)

Furniture & Fixtures includes items such as desks, chairs, reception area furniture, shelves, artwork, lamps and other items that are over $300 in value and can therefore be depreciated. If a company buys furniture in a set of two items for example, and the items individually are less than $300, but combined are $300 or more, they are considered fixed assets because they were purchased together as a set. The cost of depreciation and repairs are recorded in different accounts (depreciation allowance and repair expense). This account records the original cost of the furniture and fixtures.

Other Assets in bookkeeping describe assets owned by the business that are not tangible. They include such things as:

Stocks or Bonds owned by a corporation.

Goodwill fits under the Other Asset category. When purchasing an existing business that is successful, such as a franchise, the amount paid can be more than the value of the assets acquired upon purchase of that business. This is known as Goodwill. Goodwill is not tangible and therefore not depreciable. It is calculated like this:

Purchase Price – Value of assets acquired = Goodwill.

Knowing the difference between fixed and other asset accounts is important. For example, Accounts Receivable is considered to be an other asset because it isn’t fixed. It is constantly changing. Although it is not tangible, it can be turned into tangible cash in the bank when payment is received.