Question

Andrew Lighting purchases a factory and all of the equipment, computers, and vehicles within it. Andrew begins production of lamps at the factory using the equipment and delivers them to clients using the vehicles. However, the company sells the computers because it has no use for them. Which of the items included in Andrew's purchase is a fixed asset?

1. Equipment
2. Computers
3. Vehicles

Answer 1

Equipment and vehicles.

Step-by-step explanation:

A fixed asset is a long term asset that has a useful life of over one year, it is owned and used by a company to achieve its stated objectives. They are bought to generate income, and they are not meant to sell and not easily convertible to cash. Are categorized under noncurrent assets in the balance sheet.

Fixed assets have the following characteristics:

-They exist physically and, thus, are tangible assets.

-They are owned and used by the company in its normal operations.

-They are not offered by sale as part of normal operations.

Some examples are equipment, machinery, buildings, and land.