Fixed assets are assets that serve a company on a
long-term basis to maintain its business operations. These include, for
example, buildings, machinery, vehicles, software or long-term shareholdings.
In contrast to current assets, which include, for
example, inventories, receivables or liquid assets and are consumed or realized
in the short term, fixed assets generally remain with the company for several
financial years.
In the annual financial statement, fixed assets are
shown on the assets side of the balance sheet. The classification of fixed and
current assets in the annual financial statement is governed in Italy by Article 2424 of the Civil Code (Codice
Civile).
Classification of fixed assets
Fixed assets are generally divided into three
categories:
I. Intangible assets (Immobilizzazioni immateriali)
These include assets without physical substance whose
economic benefits extend over several years, such as concessions, licenses,
patents, software or goodwill.
II. Tangible assets (Immobilizzazioni materiali)
These include, in particular, tangible assets such as
land and buildings, machinery, operating and business equipment, other assets
or assets under construction, and deposits made.
III. Financial assets (Immobilizzazioni finanziarie)
These include, in particular, shareholdings,
participations in associated companies and other long-term financial
investments.
Fixed assets are generally valued at their acquisition
or production costs. In addition to the purchase price, this includes directly
attributable costs necessary to enable the asset to be used (e.g. installation
costs for a machine).
Depreciable capital goods are depreciated over their
expected useful life. As a result, the acquisition or production costs are not recognized
in full as an expense in the year of investment, but are spread over several
years.
Significance for businesses
Fixed assets are a key component of the annual financial statement and provide insight into a company’s
long-term investments.
Correct recording and valuation are crucial for an
accurate presentation of the company’s financial position. This information
serves, in particular, as a basis for banks and business partners to assess a
company’s economic situation. Furthermore, the valuation and, in particular,
depreciation affect the taxable profit. At the same time, the overview of
existing fixed assets forms an important basis for planning future investments.