Fixed Asset Disclosures Explained

Fixed asset disclosures refer to the information that a company provides in its financial statements and accompanying notes about its fixed assets, also known as property, plant, and equipment (PP&E). These disclosures offer transparency and insight into the company’s investment in these assets, their values, useful lives, changes in carrying amounts, and any related issues such as impairments or disposals.

Fixed asset disclosures are important because they help users of financial statements understand the nature of a company’s assets, its capital expenditures, and its approach to asset management. Here are some key components of fixed asset disclosures:

  1. Nature and Composition of Fixed Assets:
    • A description of the types of fixed assets held by the company (land, buildings, machinery, vehicles, etc.).
    • Information about significant groups of assets and their total carrying amounts.
  2. Measurement Basis and Valuation Methods:
    • The accounting policy used for initial recognition, measurement, and subsequent measurement (e.g., cost model or revaluation model).
    • The methods and assumptions used for calculating fair values and useful lives, if applicable.
  3. Carrying Amounts and Accumulated Depreciation:
    • The carrying amount (original cost less accumulated depreciation) of each significant class of fixed assets.
    • The accumulated depreciation at the beginning and end of the reporting period.
  4. Changes in Carrying Amounts:
    • Details of additions, disposals, and impairment losses recognized during the reporting period.
    • Any reversals of impairment losses and the reasons behind them.
  5. Reconciliation of Carrying Amounts:
    • A reconciliation of the carrying amount of fixed assets at the beginning and end of the reporting period, showing additions, disposals, depreciation, impairment losses, revaluation adjustments, and other changes.
  6. Commitments and Contingencies:
    • Information about significant commitments related to the acquisition of fixed assets.
    • Information about contingencies that may affect the carrying amounts of fixed assets (e.g., pending legal disputes).
  7. Revaluation of Fixed Assets (if applicable):
    • If the company chooses to revalue its fixed assets, the effects of revaluations on the carrying amounts, any revaluation surplus, and details of the last revaluation.
  8. Disclosures of Impairments:
    • Details of assets impaired during the period, including the nature of the impairment, the events that triggered it, and the amount of the impairment loss.
  9. Useful Lives and Depreciation Methods:
    • Information about the estimated useful lives and depreciation methods used for significant classes of fixed assets.
  10. Disclosures of Disposals:
    • Details of assets disposed of during the reporting period, including the proceeds received, carrying amounts, and any gain or loss recognized.

Fixed asset disclosures are typically found in the notes to the financial statements rather than the primary statements (balance sheet, income statement, cash flow statement). The level of detail provided in these disclosures can vary depending on the complexity of a company’s fixed asset structure, its industry, and the reporting standards it follows (e.g., International Financial Reporting Standards, Generally Accepted Accounting Principles).

By providing comprehensive fixed asset disclosures, companies help stakeholders make informed decisions about the company’s financial performance, asset management strategies, and potential future cash flows.

Caroline Grimm

Caroline Grimm is an accounting educator and a small business enthusiast. She holds Masters and Bachelor degrees in Business Administration. She is the author of 13 books and the creator of Accounting How To YouTube channel and blog. For more information visit:

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