Final answer:
The equipment racks, car lifts, and outside business sign are considered capital assets for Terry's Tire Shop.
Step-by-step explanation:
The equipment racks built into the walls, the car lifts, and the outside business sign that will be used by Terry's Tire Shop for more than a year are considered capital assets for the business. Capital assets are long-term assets that are used in the production of goods or services and are expected to provide economic benefits to the business for more than one year.
These assets are part of the fixed assets category, which includes property, plant, and equipment that are not easily converted to cash. Fixed assets are essential for businesses to operate and generate revenue.
In accounting, these assets are recorded on the business's balance sheet and their value is depreciated over time to reflect their wear and tear.