IAAO Assessment of Personal Property (500) Practice Test

A 20-ton press that is bolted to the floor is correctly classified as a fixed asset. Fixed assets refer to long-term tangible pieces of property, such as machinery, that a business uses in its operations to produce income. Since the press is a significant piece of equipment that is used for business operations and has substantial value, it fits this classification well.

Being bolted to the floor further emphasizes its role as a fixed asset, as this indicates a level of permanence and integration into the facility. Fixed assets are recorded on the balance sheet and are subject to depreciation over time, reflecting their usage and wear in the business context.

Other classifications, while related to property and equipment, do not capture the specific nature of the 20-ton press adequately. Trade fixtures typically refer to items that a tenant installs in a leased space for business purposes, which they can remove upon leaving. Leasehold improvements refer to alterations made to rental properties that enhance their value for the tenant's specific needs. Capital expenditures involve significant expenses incurred to purchase or improve fixed assets, which is a process rather than a classification of an asset itself. Thus, the classification of a 20-ton press bolted to the floor as a fixed asset is both fitting and precise.