All fixed assets are shown in the books of accounts of the business enterprise at their cost of acquisition or construction. In addition to acquisition costs, it is conventional to capitalize all other costs necessary to bring the asset to a state where it is ready to operate or to provide the services envisaged. This is because, the benefits of such expenditure are expected in the future years and the costs are treated as assets and such expenditures are capitalized. Generally fixed assets comprise a significant section of the total assets and thus are vital in representing the financial condition of an organisation. Fixed asset is basically an asset which is used for the purpose of production or providing services. It is not meant for the purpose of sale in the normal course of business.
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