Fixed assets are defined as assets which the business owns for the purpose of facilitating business and which has a remaining life span of over one year. These assets will appear on the accounts as part of the balance sheet. If you have a small business that is a limited company, you are required by HMRC to keep accurate records of all of your business equipment in a fixed asset register.
Depreciation accounting is used to write off the proportion of an asset or group of fixed assets on a balance sheet over a given period. Assets will depreciate at various rates, from 3 years to 20 years depending on the use of the equipment and its manufacturer recommendations. Items such as furniture, computers, machinery and plant equipment have useful lives of more than one year, so their impact continues on to the following tax years throughout the lifetime of their usefulness.