Fixed Asset
The definition of Fixed Asset is an asset which the business owns and will have a remaining life for over one year. They appear on the accounts as part of the balance sheet.
If your business is a limited company you are required by law to keep a record of all your equipment in a fixed asset register. This can either be a simple spreadsheet, a list in a notebook or if you have lots you may need to use a software package.
What are fixed assets?
There are two types of assets:
- Tangible assets - These are physical assets that the business owns including buildings, plant, machinery, computers and equipment.
- Intangible assets - These are non physical and will have a claim to future cash including patents, goodwill, trademarks and copyrights.
Fixed Asset Accounting
Fixed Asset Accounting can be complicated; it may be worth speaking to your accountant to find the best way for your business to calculate the costs.
Tangible Assets are normally calculated by taking the purchase value of the item and reducing it by depreciation over a period of time.
Intangible Assets are harder to value as they have no fixed costs.
Fixed Asset Software
There are several choices for Fixed Asset software packages. If you already have an accounting package, check to see if it includes Fixed Assets.
If you are a larger company and need to track and value fixed assets there are some fixed asset software available.
Fixed Asset tracking
There are several ways to complete fixed asset tracking. If you are a one man band you will know where the equipment is. If you have a couple of employees it may be worth giving each piece of equipment a sticker with a unique number.
If you run a larger company or have a lot of assets it may be worth investing in fixed asset tags or labels. Some of these will include a bar code which can be read with a barcode reader and the equipment will then be identified.
We have written a short guide on barcode asset tracking, this explains how barcodes and scanners can work with all your assets.
Return from fixed asset to bookkeeping basics page.
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