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Is the cost of land, buildings, and machinery a fixed cost?

Author:
Harold Averkamp, CPA, MBA

Land, Buildings and Machinery are Fixed Assets

It is common for people to refer to land, buildings, and machinery as fixed assets. They are also referred to as plant assets and are reported on a company’s balance sheet under the heading of property, plant, and equipment.

Depreciation of the Building and Equipment is a Fixed Cost

The depreciation expense associated with a company’s buildings and machinery is considered to be a fixed cost or a fixed expense. The property insurance expense associated with these assets is also a fixed cost or fixed expense.

Fixed expenses such as depreciation expense and property insurance expense are reported on a company’s income statement. Understanding which costs are fixed and which are variable is important for determining a company’s break-even point.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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