Vehicles are classified as assets on a balance sheet. Specifically, they fall under the category of fixed assets or property, plant, and equipment (PP&E). These are long-term assets that a business uses in its operations to generate income. Since vehicles have a useful life that extends beyond one accounting period, they are not expensed immediately but rather depreciated over time.
When a business purchases a vehicle, it records the vehicle’s cost as an asset in the balance sheet. As time passes, the vehicle’s value decreases due to wear and tear, which is accounted for through depreciation. Depreciation adjusts the asset’s value on the balance sheet and reflects the reduction in value due to usage and age.
In summary, on a balance sheet, vehicles are listed under fixed assets, and their value is gradually decreased through depreciation to accurately represent their worth to the company over time.