Editing Fixed asset (section)

==Accounting treatment==
The primary objective of a [[business|business entity]] is to be profitable and increase the wealth of its owners. To do so, management must exercise due care and diligence by matching the expenses for a given period with the revenues of the same period. The period of use of [[revenue]] generating assets is usually more than a year, i.e. long term. To accurately determine the ''Net Income'' (profit) for a period, incremental depreciation of the total value of the asset must be charged against the revenue of the same period. Doing so is necessary for determining ''Net Revenue''.<ref name=":0" /><ref>{{Cite web |title=Conceptual Framework for Financial Reporting |url=https://www.ifrs.org/issued-standards/ifrs-standards-framework/}}</ref>

''Net book value'' of an asset is the difference between the historical cost of that asset and its associated depreciation. Under most financial accounting standards (Standard Accounting Statement (SAS) 3 and IAS 16), the value of fixed assets are recorded and reported at net book value. Also, carrying assets at net book value is the most meaningful way to capture asset values for the owners of the business and potential investors.<ref>{{Cite web |title=Net Book Value |url=https://corporatefinanceinstitute.com/resources/accounting/net-book-value/ |access-date=2025-04-23 |website=Corporate Finance Institute |language=en-US}}</ref>