Category: Accounting software and technology

What’s the difference between depreciation and amortization?

In fixed asset management, it's important to determine the difference between amortization and depreciation and when to use which strategy. The answer is relatively simple. Both approaches are used to spread the cost of a fixed asset over its useful life rather than accounting for its value all at once, according to Accounting Tools. Depreciation is used for tangible assets, while amortization is used for intangible assets. Depreciation When accounting for a tangible fixed asset, companies use depreciation to determine its value over time. Tangible fixed assets, like vehicles, become less valuable over time because they are subject to wear and…

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Managing intangible fixed assets

Most fixed assets a company has in its possession are relatively obvious. A computer, a vehicle, a building or piece of furniture are all tangible fixed assets that are easily recognizable. However, identifying fixed assets isn't always so cut and dry. For instance, software may also be considered a fixed asset, as can a trademark or goodwill, which results from an acquisition. The rules that pertain to intangible fixed asset management may differ slightly from those that govern tangible fixed assets. Accounting Tools defines an intangible asset as a non-physical asset, which has a useful life of more than one…

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How to prevent fixed asset management fraud

All companies want to believe their employees are honest and loyal. However, employee thefts and fraudulent activity occur frequently. Two of the best defenses to prevent this sort of activity are thorough fixed asset management practices and a software platform that can achieve greater visibility and security. More prevalent than businesses realize A study from University of Cincinnati criminal justice doctoral student Jay Kennedy found 64 percent of small businesses have experienced employee theft, but only 16 percent reported it to the police. Cash was the asset most likely to be stolen, but 14 percent of thefts were tools and equipment. The report…

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How to perform an asset inventory

Fixed asset management is a necessary part of accounting at most companies, especially when organizations consider that up to 20 percent of an their assets may no longer actually exist, according to American Appraisal. However, too many companies have never performed an internal audit of their fixed assets, which means they could be leaving many resources unaccounted for. One of the first steps in getting started with a fixed asset management program is identifying pieces of property and developing a system for tagging everything from computers to desk chairs. Depending on the size of an organization, this may be no easy feat….

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Uncover the hidden money in fixed assets

There's no doubt that fixed asset management is a central part of accounting, but many companies don't understand quite how vital it is. Fixed assets often make up a large component of a company's investments. Having greater knowledge about fixed asset management can allow companies to uncover hidden cash and improve business. Extra deductions There may be a wealth of tax deductions hidden in fixed assets. If companies haven't performed a cost segregation study, it's hard to tell for sure. According to Commercial Real Estate's Global Standard for Professional Achievement, cost-segregation studies have immense value. Through this process, companies make…

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