Understanding Fixed Assets

Understanding Fixed Assets
Assets are economic resources obtained and controlled by an enterprise as a result of past transactions, one of which is the company's fixed assets used in the operations of the company in producing the product. To produce these products, the role of very large assets, such as land as a place of production, the building as a factory and offices, machinery and equipment as a means of production, and others. Property and equipment is also a major part in preparing the company's financial position.

To understand about fixed assets, there are some opinions that will be expressed as follows:

According to Statement of Financial Accounting Standards (SFAS) No. 16, paragraph 5, states that:

"Fixed assets are tangible assets acquired in the form of ready-made or constructed in advance, which is used in the operation of the company, not intended for sale within the framework of normal business activities and have a useful life of more than one year". (Indonesian Institute of Accountants. Financial Accounting Standards. Salemba Four, Jakarta, 2004, No. 16 Paragraph 5)

From the above definition of fixed assets, yan g defined as fixed assets are:

     An intangible asset
     It has a useful life of more than one year
     Used in operating activities of the company
     Not intended for resale


H Sofyan Safri opinion states that the definition of fixed assets are as follows:

"Fixed assets are assets which become the property of and used on an ongoing basis in the activities of producing goods and services of the company". (Sofyan Safri H. Accounting for Fixed Assets. PT.Raja Grafindo Persada, Jakarta, 2002, p 20)