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It is important on the disposal of an asset to determine whether the asset is a fixed asset or a current asset in the business. Fixed assets may be further classified in the accounts into tangible fixed assets and intangible fixed assets; intangible fixed assets for companies are subject to the separate rules for corporate intangible assets, see D1.630. An amount received on the disposal of a tangible fixed asset is not a trade receipt (although this is), but where a current asset is disposed of, the sum received for it is a trade receipt. Accordingly, it is necessary to distinguish between tangible fixed assets and current assets so that the calculation of trading profits can be carried out accurately, and any capital element is eliminated from this figure.

An asset which is a part of the fixed capital of a business is one which is kept and used