Where to Find Fixed Assets on Financial Statements?

Companies rely on fixed assets, which are long-term assets fundamental to producing goods or services. Understanding where to locate information about these assets within a company’s financial statements provides a clearer picture of its operational foundation. This guide will walk through the primary financial documents where details about fixed assets are presented.

What Fixed Assets Are

Fixed assets are tangible items a company owns and uses to generate revenue over an extended period, typically more than one year. These assets are not intended for sale; instead, they are held for their productive capacity. Examples include land, buildings, machinery, equipment, vehicles, and furniture.

Most fixed assets decline in value over their useful lives due to wear and tear, obsolescence, or consumption. This decline is systematically recognized through depreciation. Land is a notable exception, as it is generally not depreciated because it has an indefinite useful life.

Fixed Assets on the Balance Sheet

The Balance Sheet is the primary financial statement for understanding a company’s fixed assets. It provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time. Fixed assets are typically listed under the non-current assets section, often labeled as “Property, Plant, and Equipment” (PP&E) or “Fixed Assets.”

Fixed assets are usually reported at their “net book value.” This value is calculated by taking the asset’s historical cost (original purchase price plus costs to get it ready for use) and subtracting its accumulated depreciation. For instance, if machinery cost $100,000 and has accumulated $30,000 in depreciation, its net book value would be $70,000. This presentation offers insight into the remaining value of the assets after accounting for their usage over time.

Fixed Asset Insights from Other Statements

While the Balance Sheet shows the accumulated value of fixed assets, other financial statements provide additional context regarding their impact on a company’s financial performance and cash flows. The Income Statement reflects the periodic cost of using these assets through depreciation expense. This non-cash expense is allocated over the asset’s useful life and reduces the company’s reported net income.

The Cash Flow Statement offers a view of cash movements related to fixed assets, specifically in its investing activities section. This includes cash outflows for the acquisition of new fixed assets (capital expenditures or CapEx) and cash inflows from the sale of old fixed assets.

Detailed Information in the Financial Notes

Beyond the summary figures on the main financial statements, the Notes to the Financial Statements provide detailed information about fixed assets. These notes disclose the accounting policies a company uses for its fixed assets, such as the specific depreciation methods applied.

The notes also provide a breakdown of fixed assets by category (e.g., land, buildings, machinery), along with their gross cost, accumulated depreciation, and net book value for each category. This granular detail allows for a more comprehensive understanding of a company’s investment in its long-term operational resources.