What are fixed assets in governmental accounting?

In governmental accounting, fixed assets refer to long-term tangible assets used in operations. These assets are typically acquired for long-term use and are not intended for immediate resale. They include items such as land, buildings, vehicles, and equipment that a government entity uses to provide services to the public. The key characteristic of fixed assets is their durability and the fact that they contribute to the operations of the government over multiple years, allowing for the efficient delivery of services and functions.

By recognizing fixed assets properly, governmental entities can effectively manage and report on their resources, reflecting their investments in infrastructure and other critical functions that support their mission and goals. This also plays an essential role in financial reporting, as these assets are subject to depreciation, reflecting their usage and the allocation of costs over time, which impacts the financial statements and budgeting processes.

Other types of assets, such as short-term investments or current assets meant for sale, do not fit this description as they are intended for quick liquidation or operational turnover rather than long-term use in providing governmental services. Intangible assets, while important, typically do not include the tangible characteristics defined for fixed assets, which are specifically referenced in the context of long-term operational use.