1. Companies hold fixed asset investments for a variety of reasons.
i) Suggest 5 possible reasons
Fixed assets, or non-current assets, are assets that cannot easily be converted into cash.
Fixed assets can be for example:
- Tools used in production
- Motor vehicles
- Land and buildings
- Office equipment
- Computers

For example a company can hold fixed asset because it has bought new machinery to increase its production. It can also be because the company needs motor vehicles to move its production from a production site to another. It can be the building used for production or administration, or the office equipment and computers.

ii) Explain why it is important for the reader of accounts to have as clear an idea as possible of the reasons for any significant holding It is important for the reader of accounts to have as clear an idea as possible of the reasons for any significant holding to understand the accounts. Accounts are not self explanatory: they have to be analyzed. For example some assets will be depreciated a lot faster than others, like motor vehicles compared to buildings. So only the amount of fixed assets owned is not sufficient to have a clear idea. We could also take the example of guarantee for bank loan. Banks guarantee their loans by evaluating the assets of the company, so if the company does not pay them back they will sold the assets of the company. But all fixed assets do not provide the same guarantee: for example the same amount of building is a lot more a guarantee than the same amount of office equipment or computers, a lot harder to sell. That is why it is important for the reader of accounts to have a clear of the reasons for a significant holding.

2. Companies hold current asset investments for a variety of reasons. iii) Suggest 5 possible reasons
Current assets are assets that are expected to be sold or used up in the near future, usually within one year.
Current assets can be for example:
-cash at bank