A computer that is currently in use is classified as?

A computer that is currently in use is classified as a fixed asset because it has a physical presence and is utilized by a business or organization for operations over a long-term period. Fixed assets are significant resources that are not expected to be converted into cash within a year; they include items such as machinery, buildings, and, importantly, computers when they are owned and actively being used in business functions.

This classification is essential for accounting purposes as fixed assets are capitalized and depreciated over time, reflecting their usage and contribution to the entity’s value. The cost of the computer is allocated over its useful life, allowing for accurate financial reporting and tax implications related to the investment in these assets.

In contrast, inventory refers to items that are held for sale or trade, intangible assets encompass non-physical assets like trademarks or patents, and leasehold improvements refer to modifications made to leased properties. These categories do not appropriately describe a computer utilized in the daily operations of a business as a fixed asset does.