Fixed capital is a concept in economics and accounting, first theoretically analysed in some depth by the economist David Ricardo. It refers to any kind of real or physical capital that is not used up in the production of a product. It is contrasted with circulating capital. Economics (deriving from the Greek words οίκω [okos], house, and νέμω [nemo], rules hence household management) is the social science that studies the allocation of scarce resources to satisfy unlimited wants. ... Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ... David Ricardo (April 18, 1772 — September 11, 1823), a British political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists. ... In general physical capital refers to any non-human asset made by humans and then used in production. ... Circulating capital is a term used by classical economists such as David Ricardo and others such as Karl Marx. ...

Refining the distinction between fixed and circulating capital in Das Kapital, Karl Marx emphasizes that it is really purely relative, i.e. refers only to the comparative rotation speeds of different types of capital assets. Fixed capital also "circulates", except that the circulation time is much longer, because a fixed asset may be held for 5, 10 or 20 years before it is discarded or depreciated. Das Kapital (Capital) is a very large treatise of political economy written by Karl Marx. ... Karl Marx Karl Marx (May 5, 1818 Trier, Germany – March 14, 1883 London, UK) was an influential German philosopher, political economist, and revolutionary organizer of the International Workingmens Association. ...

In national accounts, fixed capital is conventionally defined as the stock of tangible, durable fixed assets owned or used by resident enterprises for more than one year. This includes plant, machinery, vehicles & equipment, the value of land improvements, and buildings. Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. ...

Attempts have been made to estimate the value of the stock of fixed capital for the whole economy using direct enterprise surveys of "book value", administrative business records, tax assessments, and data on gross fixed capital formation, price inflation and depreciation schedules. A pioneer in this area was the economist Simon Kuznets. The book value of an asset or group of assets is sometimes the price at which they were originally acquired (historic cost), in many cases equal to purchase price. ... Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ... Simon Kuznets Simon Smith Kuznets (April 30, 1901–July 8/9, 1985) was an economist who won the 1971 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic...

Using the so-called "perpetual inventory method", one starts off from a benchmark asset figure, and adds on the net additions to fixed assets year by year, while deducting annual depreciation, all data being adjusted for price inflation using a capital expenditure index. In this way, one obtains a time series of annual fixed capital stocks. In statistics and signal processing, a time series is a sequence of data points, measured typically at successive times, spaced apart at uniform time intervals. ...

However, it is widely acknowledged that it is extremely difficult to obtain any accurate measurement of the value of fixed capital, especially because even the owner himself or herself may not know what assets are currently "worth". Some valuations for fixed assets may refer to historic cost (acquisition cost), others to current replacement cost, current sale value in the market, or scrap value. The depreciation write-off permitted for tax purposes may also diverge from so-called "economic depreciation" or "real" depreciation rates. Sometimes statisticians try to estimate the average "service lives" of fixed assets as a basis for calculating depreciation and scrap values. Measurement is the determination of the size or magnitude of something. ... In accounting terminology, Historic Cost (HC) is the actual purchase price plus incidental costs incurred in making the fixed asset ready for use / commercial production. ... Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...

A business executive who invests in or accumulates fixed capital is tying up money in a fixed asset, hoping to make a future profit. Thus, such an investment usually implies a risk. Investment is a term with several closely related meanings in finance and economics. ...