Archive: Jun 2012

Is Your Fixed Asset Management Reasonable and Appropriate?

In order to maintain adequate controls and observe compliance measures pertaining to fixed assets, companies must follow the Generally Accepted Auditing Standards set by the American Institute of Certified Public Accountants’ Auditing Standards Board. Fixed asset auditing standards are primarily covered by AU sections 328 and 342. Section 328 AICPA defines the purpose of this section as “to establish standards and provide guidance on auditing fair value measurements and disclosures contained in ļ¬nancial statements.” So how do fixed assets fit in? As Accounting Web explains, the principal issues affecting fixed assets involve valuing assets received in non-monetary exchanges and calculating…

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Explaining Tangible and Intangible Fixed Asset Categorizations

Fixed assets typically stay on a company’s books for at least a year, and are used to help run the business and generate income. Their value decreases over time due to wear and tear, age and obsolescence in accordance with asset depreciation schedules. They take a variety of forms – including land, buildings, vehicles, machinery and furniture – and can be divided into tangible and intangible assets. Tangible fixed assets Physical property, such as land, tools, furniture and buildings, are considered tangible assets, along with long-term financial investments – for instance, joint ventures or stakes in other companies. It’s worth…

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Why Upgrade to Fixed Asset Management Software?

Upgrading to fixed asset software is a wise choice for your company for a number of reasons. Let’s take a look at a few of them: Mitigating inaccurate depreciation calculation As anyone who’s ever worked with spreadsheets knows, they are extremely susceptible to error because the formulae they use must be entered by hand. The fact that multiple people are typically involved in maintaining and editing the same data makes spreadsheet-based fixed asset management even more risky. Establish an audit trail It’s important that fixed asset data be as accurate as possible. Sometimes, in scenarios where numerous people have access…

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Types of Fixed Asset Disposal

There are many reasons why a company may want to remove a fixed asset from its books, and the form of disposal action taken by your business will impact your tax liability in different ways. For instance, if you sell a fixed asset for a profit, you will be required to recapture the depreciation and pay tax on it at ordinary rates. If you sell for a loss, you may have to take a Schedule D capital loss deduction. Generally, abandoning property still allows for a tax benefit. However, there’s an exception if you owe money on the property. Involuntary…

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Taking a Cost-Saving Approach to Fixed Asset Acquisition

In their first year of business, companies can rack up considerable expenditures. There are startup costs related to license acquisition and business registration fees, for example, as well as a slew of ongoing operating costs, such as utilities, rent and wages. During this time, the business will likely make a significant number of fixed asset acquisitions. Company vehicles, computers, mobile devices and property all come under the umbrella of fixed assets – but that doesn’t mean they’re all necessary purchases. For instance, computers and related paraphernalia – keyboards, printers, software licenses and the like – can be leased instead of…

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