Fixed Assets and Utility Billing

Question 1

What is a fixed asset?

Answer 1

Capital assets: Assets we will not sell within a year (something tangible): Office buildings, police cards, etc.

Non-capital assets: Things that are easy to liquidate, that we will fully expense out when we purchase them.

Question 2

Fixed Asset example:

• Purchase police card for $50k, we expect to use it for 5 years.
• We can sell the card for $10k after 5 years (salvage value).
• The amount we will depreciate is 40,000 (50-10)
• The annual depreciation is 8,000 ($40k/5 years)
• The accountant does not expensive $50,000 in one year, they expense $8,000 for 5 years.