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Assets application. Part of the FreeBalance Finanacial Accountability Suite platform. This module shares features with Inventories, through the Assets and Inventories Commons module.

At a basic level, a fixed asset is a long term good kept and used by the government, typically over 12 months. Inventory is also an asset but is typically kept for less than 12 months, it is intended for distribution (to citizens) or as part of a "work in progress" to make a good for resale or distribution.

An example of an inventory item is pamphlets, or paper that is purchased to make pamphlets. The pamphlets are intended for distribution to schools. Hence, this is an inventory item. A building, vehicle, or computer is normally considered a fixed asset because it is not intended for distribution (to the public) or as an item for sale by the government. Rather, it is intended for use by the government itself.

In the public sector, fixed assets encompasses a wide variety of assets from buildings to purchasable capital assets such as computers, vehicles, machinery, etc. Their role and usage is similar to the private sector, except rather than produce goods and services for commercial profit, the government's usage is to further public service delivery.

A major material difference between private and public sector asset management is in the accounting treatment and valuation issues associated with government assets vs private sector fixed assets. The private sector requires numerous depreciation approaches to maximize profitability (through a tax shield, defer taxes, etc.). In the public sector, more straightforward depreciation options such as straight-line and double-declining balances are preferred as it reduces the complexity of the accounting treatment, management and maintenance of government assets.

The major accounting differences for fixed assets vs inventories is the management of the cost. Fixed assets are depreciated over the life (usage) of the asset; inventories (as assets) are typically expensed off on a usage basis. Depreciation may or may not be required on inventories. Within government, inventories are either provided free or at a nominal charge as part of the government's role.