Fixed Assets Accounting and Fixed Asset Register Maintenance
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What is fixed assets accounting? How to maintain fixed asset register? Author: Ckrishwa
Normally a company or a business organization will have permanent assets like land, buildings, warehouses, machineries, furniture and fixtures, vehicles like cars, lorries, trucks, office equipments like computers, etc.,. All permanent movable and immovable assets which are required for the day to day activities and for long term activities of the business or company or organization may be called as fixed assets.
Since fixed assets which comprises of movable and immovable assets are main for any business or company or organization, there needs to be a proper accounting of these fixed assets. Movable assets may be machineries, furniture and fixtures, office equipments like computers etc., Immovable assets may be buildings etc.
It is the mandatory requirement of every business or company or organization to maintain a proper fixed assets register which should contain all the details of every asset whether movable or immovable fixed assets.
The fixed assets register should have a individual folio for every category of fixed assets. For example the fixed asset register should have separate folio for buildings, separate folio for machineries, separate folio for office equipments, separate folio for furniture and fixtures etc.
Each fixed asset folio should contain the details of the description of asset along with the cost involved while erecting those fixed assets. Erection cost includes fixed asset value, freight cost, loading and unloading charges and all other costs involved at the time of erection of the fixed assets.
A detailed description of the asset like serial or manufacturer's identification number of the asset, where the asset is presently located like branch office or head office or section or department, supplier's name, date on which the fixed asset received, date on which the fixed asset was commissioned and all other important details connected with the fixed asset should be recorded separately for every category of the fixed assets in the fixed asset register. Every fixed asset should also contain the details of depreciation provided for every year.
As already said sufficient space should be provided for adding additional assets of the same category or can continue in the same folio. It means for example if there is a folio for the fixed asset computer, additional computers purchased can be added in the same folio with the essential details as mentioned in the previous paragraph.
In some established business organization or company physical verification of fixed assets with reference to the fixed asset register will be carried out periodically. The physical verification of fixed assets will be done by an authorized official or person of the company or organization periodically. Some company may have physical verification of fixed assets on a quarterly, half-yearly and on annual basis.
Proper maintenance of fixed assets register enable the business organization or company to know how much worth was the asset's value at the time of purchase and how much worth the asset's present value after providing necessary depreciation. Fixed assets register will also help the business organization or company to take decision whether to continue with the asset or to dispose of the asset or to spend more for maintaining the asset.
