A building that a company owns but leases out is classified under which category?

A building that a company owns but leases out is classified as a fixed asset. This classification is appropriate because fixed assets, also known as tangible assets, are long-term resources that a company uses in its operations to generate revenue. They typically include real estate, machinery, and equipment that are not intended for resale in the normal course of business.

In this context, the owned building remains a part of the company’s property and is recorded on the balance sheet as a fixed asset. It maintains value over time and is subject to depreciation, reflecting its declining value due to wear and tear or obsolescence.

While capital assets might also seem relevant since they encompass long-term assets important for the business, "capital asset" is a broader term and typically refers to assets that may not be easily convertible to cash within a year. The specific classification as a fixed asset is more precise in this scenario.

Leasehold improvements and trade fixtures are not applicable here. Leasehold improvements pertain to modifications made to a leased space to meet the needs of the tenant, while trade fixtures refer to items that a business owner installs in a rental property to conduct business, which can be removed at the end of the lease. Since the company owns the building, these categories do not fit