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.
