Auditing Fixed Assets

Courtesy Wasp Barcode Technologies

Courtesy Wasp Barcode Technologies

Executing regular audits of fixed asset inventory is a good way to make sure that a company’s asset records are accurate. Inaccurate asset records will affect financial balance sheets, losses may occur and fixed assets may not be available when needed. In a post on Wasp Barcode’s Blog, Brian Sutter explains the building blocks of an effective fixed asset audit.

The audit process does not have to be difficult or time-consuming.  

  • Accurate Financials

If your asset records are not accurate, your balance sheet will be incorrect. This can be extremely detrimental to a company. Fixed asset reporting is an intrinsic part of the balance sheet.

If your company’s fixed asset listing is considerably different than what is detailed, there is a significant problem with the process of managing your company’s assets.

Additionally, companies and organizations that depend on their fixed assets are able to immediately correct asset management problems by regularly conducting thorough asset audits.

  • Audit Principles

However you choose to complete the audit, the basic principle is the same:

  • Look at your last audit numbers.
  • Determine your current audit numbers.
  • Ensure that the difference coincides with your transaction reports.

The amounts listed on your balance sheet should match the detailed listing of your fixed asset inventory. When comparing the two, verify the following is true about each asset:

  • The asset is valued correctly.
  • The asset has been classified correctly.
  • The asset’s purchase and/or sale dates are accurate.

In addition to the information listed above, you should also have all applicable documentation and ownership information for each asset.

Read the full article here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can register for our live webinar, download a free evaluation copy and get a personalized pricing estimate.

Dynamic Browse to View a Set of Fixed Asset Records

dynamic browseA spreadsheet is the perfect tool to “look” at fixed asset data. It easily organizes many rows and columns into a clean presentation of the key fields of information. Bassets eDepreciation includes many of the best features of a spreadsheet in our Dynamic Browse.

The Browse tab of the asset maintenance form provides the asset manager with a row and column view of the detail data. In addition, there is functionality to:

  • Sort: click on the title row of any column to sort all of the displayed data by the values in that column. The initial mouse click will create an ascending sort of the data. A second mouse click will create a descending sort of the data.
  • Filter: click the filter (funnel) icon to display a menu of options and column values to quickly limit the displayed rows to a smaller subset.
  • Move: “grab” any column to move it to another location.
  • Resize: any column can be narrowed or widened for better display.
  • Group By: drag one or more columns into the group area to easily collect  and sort the rows.
  • Export: click the export button to send all of the data to an Excel spreadsheet.
  • Print: click the print button to generate an ad hoc report of the selected data.

Mixing the excellent presentation qualities of a spreadsheet with the integrated controls of fixed asset software gives you the best of both worlds. Use the eDepreciation Browse feature to manage groups of fixed assets and then select individual records to perform any necessary maintenance tasks like edits, transfers or disposals.

What do you think? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

View Monthly Detail Behind Depreciation Calculations

There is often confusion with the monthly calculation of depreciation. The basic calculation is to first determine the annual depreciation for each year and then divide that by the number of periods in the year. This gets more complicated with different first year conventions and changes over the life of the asset.

Bassets eDepreciation features a Detail tab as part of the Asset Maintenance form. This provides the user with Year by Year and Month by Month detail with Annual and Cumulative Totals of the depreciation calculation for the selected Depreciation Schedule for the asset record displayed on the screen.

Pictured here is an example if $6,000 asset depreciated over 5 years with a double declining balance and half year convention.

View Monthly Detail

This calculation grid shows the numbers for each individual period for the entire life of the asset. Depreciation detail can help answer questions when they arise concerning adjustments, bonus depreciation, disposals, transfers or other event changes to an asset.

Monthly Calculations

In the top part of this form there is a data grid of rows (12 periods in a year with totals) and columns (each year in an assets life). Each of the “cells” represents the monthly depreciation calculation for a single period. The columns will begin with the year the asset is placed in service and continue through until the asset is fully depreciated.

Annual and Cumulative Totals

  • Annual represents the Yearly depreciation amount for each year.
  • Cumulative represents the Yearly cumulative depreciation for each year. The calculated amount is the Annual depreciation amount plus any previous cumulative amount.
  • Remaining represents the Yearly remaining balance of an asset. The calculated amount is the Cost value minus the Cumulative total.

As you can see, the ability to view the depreciation detail behind a calculation can be very helpful in answering questions. Instead of just looking at a single cumulative number, this let’s you easily view each period for the entire life of an asset.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Transfer of a Depreciable Asset

Many fixed assets will reside in the same location for their entire useful life while others may be transferred one or more times. When an asset is transferred, it can be tricky to properly account for the correct amount of depreciation taken before and after the transfer date. Bassets eDepreciation simplifies this process and takes the guess work out for you.

An asset can be transferred from one business unit (location, division, department, etc.) to another when it is either actively depreciating or even after it is fully depreciated. Moving the asset to a new business unit means also moving the assets’ monthly depreciation amount. The confusion sometimes comes from then applying any prior accumulated depreciation to the original asset. Let’s look at the processing involved and examine the financial impact of a transfer.

Bassets eDepreciation will process both complete and partial transfers with the transfer form shown here:

For a complete transfer you only need to enter a transfer date and 100% of the asset will be allocated to the new business unit. Bassets eDepreciation will create a second asset that can then be edited to reflect the values of the new location.

For a partial transfer you need to enter a transfer date along with either a percentage or dollar amount to represent the portion of the asset that is being transferred. In this scenario, the original asset will continue depreciating at a reduced amount while a new asset is created for the transferred portion.

In both a complete and partial transfer it is critically important to be able to run a report for a current period before the transfer date and still see the correct depreciation amounts. Some systems simply move the asset to a new location and then lose any history of the original values.

For more detail on understanding the transfer report, please refer to our earlier post:

Understanding Depreciation Transfer Reports

 

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Monthly Depreciation Expense Journal Entries

This will mark the third post in our coverage of depreciation reporting and will address the elements of monthly depreciation expense journal entries.  This type of reporting is important to many professionals as most companies will report their depreciation expense on monthly financial statements.  There are 2 main reasons to account for monthly depreciation expense:

  1. To match expense to income
  2. To accurately represent the value of your assets in the balance sheet

A monthly depreciation expense report can generate the necessary journal entries for both accumulated depreciation (credit) and depreciation expense (debit) accounts.  The processing will summarize all of the selected assets by general ledger code for a single accounting period.

The columns of this report should include:

  1. General Ledger Account
  2. Account Description
  3. Debit
  4. Credit

Here you can see what a version of this report will likely look like:

monthly-depreciation-reporting
Some fixed asset software packages will offer a general ledger interface which can automate the monthly upload of the depreciation journal entries.  When this option is not available, a depreciation expense journal entry report can be used to manually enter the information into your general ledger.

If you find the need for any help understanding these reports, please feel free to share any questions that you may have.  You may do so either below in the comments section, or on the questions page.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.