Category: Accounting software and technology

Calculating fixed asset turnover rate

Fixed asset management software helps companies with the ins and outs of fixed asset accounting. For instance, fixed asset turnover refers to how effectively a company is using its property to generate revenue. In short, fixed asset turnover demonstrates how effectively a company is using its fixed assets overall. Businesses can calculate this number by dividing net revenue by average fixed assets. Why does it matter?  Fixed assets represent a significant investment and businesses want to make sure they are making the most of their investment. The equipment a business buys needs to contribute to overall revenue. Calculating fixed asset turnover ratio…

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How to save money with better fixed asset management

Greater efficiency with fixed asset accounting practices saves companies money. While many companies are managing fixed assets in some way, integrating better processes reduced outmoded practices and increases return on investment. Here are a few of the ways companies can expect to save resources with improved fixed asset management practices.  Eliminate inefficiency When companies manage depreciation and other components of fixed asset accounting on spreadsheets, they likely waste a lot of time hunting down the information they need. Lack of automation can elongate the time needed for inventories and audits. This adds time onto processes that can already be time-consuming. When…

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Improve fixed asset reconciliation with automation

Reconciling fixed asset registers can be a complicated process without the right equipment. When companies maintain a significant number of fixed assets, whether vehicles or machinery, it's vital to reconcile these numbers with other internal accounts within the business. For instance, if a fixed asset was purchased at a certain price, this should be reconciled with accounts payable and receivable. If a business chooses to sell a fixed asset, the sale price should reflect the true value of the property as it has depreciated over time. According to the Houston Chronicle, reconciliation generally involved comparing several different reports to make sure the…

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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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