Looking after your assets

Probably the most neglected accounting aspect of small to medium sized businesses is the recording of fixed assets such as Manufacturing Plant, Office Furniture and Equipment, Motor Vehicles, Fixtures and Fittings, Leasehold Improvements and Buildings.

Typically a business relies on their external accountant to maintain their depreciation schedules for them on an annual basis. Not that there is anything wrong with that, except that with minimal investment in a good Fixed Assets system, the business can produce meaningful reports on demand and reduce the risk of losing valuable assets.

A good fixed assets system will link into the base accounting system to minimise rekeying of data, such as monthly depreciation entries and profit and losses arising from disposals/sales of assets. The system should also track both Accounting and Tax depreciation rates and calculations on the basis of Prime Cost or Straight Line and Diminishing Values.

When selecting a fixed assets system, ensure that it supports Asset Pooling, where low value assets are often allowed to be depreciated as a group using the diminishing value method.

Some fixed asset systems go even further and track service history and scheduled maintenance requirements.

More information: Axsapt