Archive: May 2012

Fixed Asset Management in the Food Services Industry

Companies in virtually every industry have fixed asset holdings of some capacity, although some sectors require a greater number of fixed assets than others. The property, plant and equipment owned by a commercial dining establishment is comprised of a diverse and voluminous range of items, including kitchen appliances and furniture. Restaurants without a comprehensive inventory management system in place can quickly lose track of items. It’s important to have a solid grasp on your fixed asset inventory in order to set up correct asset depreciation schedules, provide evidence to expedite a business valuation or sale and quickly pinpoint instances of…

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Breaking Down the ‘Fixed’ Part of Fixed Assets

The term “fixed asset” suggests that the items in question are immovable or permanent, but neither of these assertions are quite true. It would definitely be difficult to move some fixed assets – property, for example – but others can easily be transferred from place to place, such as small-scale technological equipment. Some even move around by definition – for instance, company vehicles. As for the permanence factor, fixed assets got their name from the fact that they stay on a company’s books longer than items that can more easily be liquidated (converted into cash). Typically, they’re in the possession…

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Explaining the Depreciation to Fixed Asset Ratio

The depreciation to fixed assets ratio offers companies a look at how quickly they are replacing their capital holdings – specifically, how fast items are being written off in accordance with asset depreciation schedules. The ratio can be calculated using a simple formula. Take the depreciation figure in your company’s profit and loss statement and divide it by the total fixed assets, minus the value of any land the firm owns. Land doesn’t undergo depreciation because it’s not considered to “wear out” and will never need replacing, unlike the buildings that may be constructed on it or the equipment it…

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The Importance of Accurate Fixed Asset Accounting in Mergers and Acquisitions

For many companies, the main purpose of implementing accurate and up-to-date fixed asset accounting measures is to get a comprehensive picture of their balance sheet for internal purposes. When it comes to mergers and acquisitions, however, having the necessary fixed asset management controls in place takes on a whole new importance. Inaccurate or out-of-date fixed asset information could lead to the company’s assets being significantly undervalued and cast its asset management capabilities in an unfavorable light. This could ultimately reduce the price offered for the company, and an insufficient or wholly absent audit trail could even cast doubt on whether…

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Why Keep a Fixed Asset Register?

All businesses need to keep a fixed asset register that will serve as a centralized receptacle for information about their entire asset holdings, broken down into purchase price, acquisition date, location and description. By using fixed asset software, companies can store all this information in one place, rather than having to deal with multiple spreadsheets or, even more confusingly, a plethora of paper files. The convenience of having this data at your fingertips can save time and money, not to mention the stress of hunting down a piece of equipment that isn’t where you thought it would be. In addition…

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