Licenses are intangible fixed assets.
A fixed asset is a financial or economic asset that does not experience changes in the fiscal year or during the operating cycle of an entity. These assets are recorded in a company 's financial statement, in the credit column.
It should be noted that the etymology of the word active takes us to actīvus , a word from the Latin language. The term can be used as a noun or as an adjective : in this case we are interested in its meaning as a noun, naming the good or right that has a financial value and that is owned by a subject or a company .
Fixed , for its part, is an adjective that can be used to describe that which is established according to certain parameters or standards or that which is established, consolidated or that does not vary.
Types of fixed assets
It is important to establish, in addition to what has already been indicated, that there are several types of fixed assets:
- Intangibles , which refer to things that cannot be physically touched, as would be the case, for example, of a trademark patent . Furthermore, this set also includes copyrights , franchises , permissions and licenses .
- The tangible ones , which are the ones that can be touched. In this case, we would be referring to vehicles , real estate , machinery , tools ... In the same way, in this group we can include computer equipment , technical installations , furniture and merchandise in general .
- Fixed assets that are presented as investments in affiliated companies .
A company's vehicle fleet is part of its fixed assets.
An example
Take the case of the warehouse where a transportation company keeps its vehicles. This is a fixed asset of the company since, while it develops its services , it remains under the property of the company without registering changes. In this way, fiscal years can pass without the shed experiencing changes that alter its value.
Those assets that do change throughout an operating cycle are called current assets . Returning to the previous example, the sheets of paper that the transportation company acquires to print shipments and receipts are circulating and not fixed assets because said sheets are modified and distributed within the framework of the firm's activity .
Other information of interest about fixed assets
In addition to what is indicated, it is relevant to have knowledge of another series of data about fixed assets in general, such as the following:
- They have a useful life, which is the time during which the company in question uses them.
- This aforementioned useful life can be influenced by everything from technological obsolescence to time, including their usefulness.
- When accounting for fixed assets, you must look at aspects such as the initial cost.
- These assets may be subject to depreciation , which can be defined as the process of assigning the cost of the asset to expenses in accordance with its original cost.