Fixed Assets Explained:
Examples, Types, Rules, and GASB 34 for Public Agencies

Short answerA fixed asset is a long-term, physical item that an organization uses rather than sells, and that lasts more than a year. Common examples are land, buildings, vehicles, machinery, computers and furniture. Fixed assets are recorded at cost, and most of them are depreciated over their useful life. Public agencies call them capital assets and report them under GASB Statement 34.

This article is general information, not accounting advice. Check your organization’s capitalization policy and talk to your auditor or accountant before changing how you record assets.

Key takeaways

• Use, not resale, makes it fixed. The same laptop is a fixed asset at a city office and inventory at a computer store.
• The capitalization threshold decides what gets recorded. Items below it are usually expensed, even if they last for years.
• Most fixed assets are depreciated, but not all. Land and construction in progress are the common exceptions.
• Leasehold improvements are capitalized, then amortized over the shorter of their useful life or the lease term.
• Public agencies report capital assets under GASB 34, and federally funded equipment adds 2 CFR 200 record and inventory rules.
• Audits usually find gaps in the physical records, not the math: assets that moved, have no tag or were thrown away without being written off.

What are the main types of fixed assets?

No accounting standard sets an official list of “four types.” Most organizations group fixed assets by how long they last and how they are depreciated. Under U.S. GAAP, ASC 360-10 names land and land improvements, buildings, machinery and equipment, and furniture and fixtures as long-lived tangible assets. That is the closest thing to the four types people search for. Public agencies usually add infrastructure and construction in progress.

Common categories on a fixed asset register:

• Land. Never depreciated.
• Land improvements. Parking lots, fences, sidewalks, outdoor lighting.
• Buildings and building improvements. The structure plus major upgrades that extend its life.
• Machinery and equipment. Production, shop, medical and lab equipment.
• Vehicles. Cars, trucks, buses, specialty vehicles.
• Furniture and fixtures. Desks, seating, shelving, built-in cabinets.
• Computer and IT equipment. Hardware that meets the capitalization threshold.
• Leasehold improvements. Upgrades to space the organization rents.
• Infrastructure (public sector). Roads, bridges, water and sewer systems, storm drains.
• Construction in progress. Projects not yet finished or in service.

Some organizations also record intangible assets, such as software licenses or easements, on the same register. They are not physical, so this guide focuses on tangible fixed assets.

What is not a fixed asset?

An item is not a fixed asset if it is meant for sale, will be used up within a year, or costs less than the capitalization threshold.

• Inventory. Goods held for sale or used to make products. A forklift dealer’s forklifts are inventory, not fixed assets.
• Supplies and consumables. Paper, cleaning products, spare parts and medical supplies are used up quickly and expensed.
• Prepaid expenses. Insurance, rent or software subscriptions paid in advance are current assets, not physical property.
• Items under the capitalization threshold. A $300 chair lasts for years, but most organizations expense it because it falls below the threshold.
• Assets held for sale or investment. Under the Minnesota Office of the State Auditor’s capital asset guide, assets held for sale or investment and assets permanently taken out of service are not capital assets.

Items below the threshold may still be tracked, even though they are not capitalized. Laptops, tablets and radios are the usual examples, because they are easy to lose.

What are the GAAP basics for fixed assets?

For businesses and nonprofits, the U.S. GAAP rules for fixed assets live in FASB ASC 360, Property, Plant, and Equipment. State and local governments follow GASB standards instead (see the GASB 34 section below). The core ideas are the same for both.

• Cost basis. Record the asset at historical cost: the purchase price plus costs to get it ready for use, such as shipping, installation and setup.
• Capitalization threshold. Each organization sets a dollar amount above which it capitalizes items. $5,000 is common, but larger organizations often use higher amounts. Write the policy down and apply it consistently.
• Useful life. Estimate how many years the asset will be used. Buildings may last decades; computers, three to five years.
• Depreciation. Spread the cost, less any salvage value, over the useful life. Straight-line is the most common method.
• Impairment. If an asset loses value or usefulness suddenly, for example from damage or obsolescence, test it for impairment and write it down if needed.
• Disposal. When an asset is sold, scrapped or donated, remove its cost and accumulated depreciation from the books and record any gain or loss.
• Repairs vs. improvements. Routine repairs are expensed. Improvements that extend useful life, add capacity or improve efficiency are capitalized.

What assets cannot be depreciated?

Land is the main asset that is never depreciated, because it doesn’t wear out. Several other assets are not depreciated, or not yet:

• Land. Considered to have an unlimited life. Land improvements, such as parking lots and fences, are depreciated separately.
• Construction in progress. Not depreciated until the project is finished and placed in service.
• Assets not yet in service. Equipment bought but not yet installed or in use.
• Inexhaustible works of art and historical treasures. Common in museums, libraries and government collections.
• Infrastructure under GASB’s modified approach. Governments that meet the approach’s requirements expense preservation costs instead of depreciating these assets.
• Assets held for sale. These are no longer depreciated.
• Fully depreciated assets. These stay on the register until disposal, but they have no depreciation left to record.

These exceptions follow the Minnesota Office of the State Auditor’s capital asset guide for governments and FASB ASC 360 for businesses.

Are leasehold improvements capitalized or expensed?

Leasehold improvements are capitalized, not expensed, when they meet your capitalization policy. Examples are new walls, wiring, flooring or built-in fixtures added to a rented space. Under ASC 842-20-35-12, a tenant generally amortizes them over the shorter of their useful life or the remaining lease term.

There are exceptions. If ownership of the property will pass to the tenant, or the tenant is reasonably certain to buy it, the improvements are amortized over their useful life. Since ASU 2023-01, improvements in leases between entities under common control are amortized over their useful life to the group, regardless of the lease term. Small repairs and routine maintenance on rented space are still expensed.

How does BarCloud help with fixed asset records?

BarCloud keeps fixed asset records, physical counts and depreciation in one system that public agencies can run in the cloud or on their own servers. These features match the register and audit steps above:

• Barcode tagging and mobile scanning for receiving, issuing, tracking and auditing assets (government).
• Location and custody tracking by site, department and user, with check-in/check-out and chain-of-custody records showing who issued, received or returned an item.
• Physical inventory counts by site, room, bin or category, with discrepancy reconciliation.
• Audit trails that record asset history and user activity.
• Depreciation using straight-line, double-declining or sum-of-years methods, with a configurable fiscal year and reporting period (depreciation).
• Scheduled reports that can go automatically to auditors or accountants.
• Role-based access by site, department and category, with admin, manager, staff and requester roles.
• Cloud, self-hosted or on-premise deployment. BarCloud is SOC 2 certified.

Arlington County Fire Department in Virginia needed this kind of record across 10 fire stations, fire training and fire marshal offices. Its Logistics Branch tracked supplies and larger assets, such as washers and refrigerators, by hand, with records spread across locations. It needed accurate physical inventory and asset counts plus custom usage and expenditure reporting. After moving to barcode tracking with unique IDs for stations, employees and apparatus, and printing its own tags in-house, the department spends less time on manual tracking and sends automated cost reports to leadership. As Fire/EMS Warehouse Coordinator LaMar Smith put it, the system “gave us the freedom to create a tracking process that was customized to our requirements” (case study).