Fixed Asset Register

July 22nd, 2007 Comments off
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What is the purpose of maintaining a  Fixed Asset Register?
  • By maintaining a proper Fixed Asset Register, it allows a company to keep track of details of each fixed asset, ensuring control and preventing misappropriation of assets
  • It also keeps track of the correct value of assets, which allows for computation of depreciation and for tax and insurance purposes
  • To comply with legislation governing corporations, companies, etc.
What is in a Fixed Asset Register?
  

  • A Fixed asset register should contain sufficient information to enable positive identification of assets.
  • Some minimum information/details required are as followed:
  • a unique identification of asset number /tag number
  • date of acquisition of fixed asset
  • cost of fixed asset
  • description
  • serial number
  • location
  • name of custodian  

As we know fixed assets can comprise of movable and immovable items like plant & vehicles, land and buildings, furniture and fittings, computers and others. Therefore, the recordings of information may varies from one type of fixed asset to another.

 

Plant and vehicles

  • Records should be maintained on each vehicle or item of plant.
  • Information should include the following:
  • the original cost of vehicles,
  • date of purchase,
  • rate of depreciation,
  • insured amount,
  • vehicle age,
  • mileage,
  • any mechanical problems experienced,
  • regular check-ups,
  • accidents

The information would help to assess when new vehicles need to be acquired. Papers should include those recording ownership, payment of registration fees, warrant of fitness and insurance.

Land and Buildings

  • An asset register should contain all relevant information on land and buildings. This includes:
  • Certificate of Title number;
  • location/area/plan;
  • Government valuation;
  • zoning of the area where the land or buildings are located;
  • market valuation;
  • improvements;
  • date acquired, and how acquired;
  • ownership, if leased;
  • present use; and
  • condition.

Furniture and Fittings – It may not be necessary to individually number all desks and chairs, but records should be kept showing the total number acquired and disposed of.Computer Terminals and Microcomputers – These assets are relatively expensive and are portable, which may mean that they are a target for theft or unauthorised disposal. Prudent precautions include listing these assets by serial number and location within the organisation.

 

 

Other Salient Points To Note:-
  

  • Stocktaking of fixed assets ( say biennial ) is a useful practise so as to confirm the existence of assets and their reported values and updates the asset register. Most cases of write-downs of assets due to theft or damage would be identified during stocktaking.
  • For audit purposes, the fixed asset register needs to contain information to support the balances in the general ledger. The register also needs to identify assets recorded on the system which are managed on behalf of other parties and which the department does not own.
  • Identification of fixed assets:
  • Physical verification of fixed assets can become a futile exercise unless the fixed asset register is properly maintained
  • It would be advisable to use a scientific numbering technique to identify fixed assets. The process of numbering fixed assets is called TAGGING. An identification number ( combination of alphabets and numbers) is written on the asset. Engraving the identification number on the asset is advisable in the case of Plant and machinery where there is heavy wear and tear.
  • A tag verifies the existence of assets and their location, aids in maintenance, provides a common ground for communication between the Accounts Department and the end-users and recording the net book value of assets in case of sale/scrapping.
  • It is not necessary to tag all fixed assets. Land, buildings and vehicles all have independent systems of tracking in registration papers and survey numbers.  

 CLICK HERE FOR ALL ARTICLES ON DEPRECIATION OF FIXED ASSETS

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Financial Accounting

 
 

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