Fixed assets are long-term or relatively permanent tangible assets that are used in the normal business operations and are not intended for sale to customers.Such assets must be capable of providing repeated use or benefit，and sale normally expected to last more than a year.But long-term assets acquired for resale in the normal course of business are not classified as fixed assets，regardless of their nature of the length of time they hold.Other descriptive titles for such assets are plant，property，and equipment.

Fixed assets are often subdivided into four classes:

1.Land，such as a building site.

2.Land improvement，such as driveways，parking lots，fences，and underground sprinkler system.

3.Buildings，such as stores，offices，factories，and warehouses.

4.Equipment，such as store check out counters，cash registers，coolers，office furniture，factory machinery，and delivery equipment.

Land has an unlimited life and therefore can provide unlimited services.However，other fixed assets such as land improvements，buildings，and equipment lose their ability，over time，to provide services.As a result，the cost of land improvements，buildings，and equipment should be transferred to expense accounts in a systematic manner during their expected useful lives.This periodic cost expiration is called“depreciation”.

Factors that cause a decline in the ability of a fixed asset to provide services may be divided into two categories.First，physical depreciation caused by wear and tear from use and from the action of the elements decreases usefulness.Second，functional depreciation caused by inadequacy and obsolescence decreases usefulness.A fixed asset becomes inadequate if its capacity is not able to meet the demands of increased production.A fixed asset is obsolete if the item that it produces is no longer in demand or if a newer machine can produce an item of better quality at the same or lower cost.Advances in technology during this century will make obsolescence an increasingly important cause of depreciation.

The acquisition of fixed assets is a very important decision for a business enterprise.And then because of depreciation it follows subsequent questions:(1) keeping the assets in good operating condition，(2)replacing worn-out or outdated facilities，(3)expanding productive resources as needed.