A fixed asset is a purchase item. This item is neither sold, nor is it used in production as a raw material. Instead, you use it internally in the company. The item could be a computer or a piece of furniture for internal use. When you select Fixed Assets for an item, you assign a separate status to the item. You maintain items of this type independently of purchase, sales, and inventory items.

A fixed asset item must be linked to an appropriate expense account for assets in Accounting.

When you enter an A/P invoice or goods receipt PO for a fixed asset, the value is posted to the appropriate fixed asset account and not to a purchase account. The VAT is posted to a VAT for equipment and assets account and not to the usual VAT account for item purchases.