Exploring fixed assets
What exactly is a fixed asset, you ask? Whether called a capital asset, long-term asset, fixed asset, or something else, it is a tangible item with a useful life of over a year. This would include items such as buildings, land, computers, production machinery, furniture, and vehicles.
The Internal Revenue Service (IRS) rules, effective from January 1, 2016, set the de minimis safe harbor, an administrative convenience, at $2,500 per invoice or item. What that means is that expenses under $2,500 are considered expenses and those over $2,500 are to be capitalized and treated as fixed assets.
Let’s jump into Xero and learn how to handle fixed assets. Start by clicking on Accounting to activate the menu and then choosing Fixed assets:
Figure 10.1: Fixed assets menu option
This takes you to the main Fixed assets screen. It has the familiar Xero look with menu buttons at the top and the tabs (Draft, Registered, and Sold &...
