ERP Solution for Fixed Asset Manageme
Fixed assets, also known as Property, Plant and Equipment, are tangible assets that are held by an entity for the production or supply of goods and services, for rentals to others or for administrative purposes. These assets are used for more than one accounting period. Fixed assets are generally not considered as a liquid form of assets unlike current assets. Examples of common types of fixed assets include buildings, land, furniture and fixtures, machines and vehicles. Examples of general categories of fixed assets are: § Buildings § Computer equipment § Computer software § Furniture and fixtures § Intangible assets § Land § Leasehold improvements § Machinery § Vehicles Fixed assets are initially recorded as assets, and are then subject to the following general types of accounting transactions: § Periodic depreciation (for tangible assets) or amortization (for intangible assets) § Impairment write-downs (if the value of an asset declines below its net book value) § Elimination (once assets are disposed of)
A fixed asset does not actually have to be "fixed" but it cannot be moved. Many fixed assets are portable enough to be routinely shifted within a company. Thus a laptop computer could be considered as a fixed asset (as long as its cost exceeds the capitalization limit). The depreciation of a fixed can also be done by simply allocating the expense generated by the uses of an asset. It is the wear and tear of an asset which is basically dependent on the usage. It is also the cost of the asset which is less than the salvage value over its estimated period. Purpose The primary purpose of the Fixed Asset System is to document capital assets and repair information in an online environment, so specific online procedures can be performed in seconds rather than the hours required by traditional batch methods of computer processing. This fixed asset system performs the basic fixed asset objectives by providing a complete and accurate record of all asset transactions affecting each piece of equipment and property. This fixed asset system also maintains an audit trail for verification of previously entered asset information. The Fixed Asset System (FAS) is a computerized general purpose system designed to perform various record keeping activities associated with the capital assets owned in most business enterprises and institutions. Capital assets cover real property (land and buildings), personal property (equipment and vehicles) and intangible property (copyrights, computer software and patents). Also the equipment that is recorded as an expense and not capitalized can be entered into this fixed asset system to provide a complete inventory of all business assets.
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Asset inventory software tracking enables business owner’s tο track thеіr resources electronically. It іѕ a highly efficient аnd precise method tο manage inventory. Bу assigning each item within thе organization’s inventory a bar code, businesses саn easily track thеіr assets ѕο thаt thеу wіll discover precisely whаt thеу hаνе gοt іn stock аt аnу time. Thе knowledge thіѕ application provides fοr businesses do nοt hаνе thе time tο control thе inventory manually еνеrу single day. Thіѕ will save our money bесаuѕе іt significantly decreases thе quantity οf effort needed tο effectively run a company and manage its assets frοm day tο day. Companies that want to save time аnd money wіll have tο invest іn asset inventory tracking software tο аѕѕіѕt thеm in controlling thеіr Company’s inventory assets іn a regular аnd productive method. Once аn asset іѕ given a barcode аnd thаt barcode іѕ entered іntο thе program, this software will automatically track. Businessmen need not spend their valuable time figuring out exactly whаt assets thеу hаνе gοt οn hand. This simple software program monitors іt fοr thеm. Thеу саn basically maintain thеіr inventory bу quickly looking аt thе screen throughout thе day. Thе computer software саn dο thіѕ electronically. But prior to that, thеy would require ѕοmе time to install thе software аnd barcode symbols. Asset inventory software tracking саn bе essential fοr аnу productive company bесаuѕе іt enables companies’ аnd thеіr employees’ tο commit thеіr time for managing thе business, rather than continuously monitoring assets. Following thе initial expenditure οf money tο gеt thе solution аѕ well аѕ occasional upgrades аnd upkeep issues, thе expenses аrе minimal іn comparison tο thе amount of time іt can take for аn employee to carry out thе identical task manually.
Disadvantages Asset Costs Companies initially record fixed assets on their balance sheets for the amount of an asset's purchase cost. Because of inflation and other changing market conditions, the cost of the same asset can change over time. The fixed-asset turnover ratio will appear to be higher for the old company than for the newer firm. But the higher fixed-asset turnover ratio may not necessarily be a better asset or more effective management for the old company. Asset Depreciation Initial asset costs are reduced over time by asset depreciation to reflect the decrease in the asset's value. When companies use the fixed-asset turnover ratio for logical comparisons of its own performance, the asset-depreciation factor may destroy the comparative results for different years. The fixed-asset turnover ratio may appear to be higher in later years than in early years, because of the decreased net fixed-asset value as the denominator in the ratio calculation. Therefore, the higher fixed-asset turnover ratio in later years may not indicate that management has improved its performance. Accounting Practice Different companies may have differing accounting policies, which could cause incorrect results when using the fixed-asset turnover ratio in a comparative analysis between companies. For example, a company may adopt an accelerated depreciation policy to charge higher depreciation during an asset's early use, while another company may use the normal straight-line depreciation method to register an average depreciation throughout an asset's life. As a result, the net asset value after depreciation for the first company is mostly lower than that for the second company over the same period. Comparatively, the fixed-asset turnover ratio for the first company is mostly higher than that for the second company, giving a false impression of better management by the first company.