How to track fixed assets

Making assets listIn last month’s blog, I talked about the importance of tracking fixed assets, promising to look next at what information that tracking should include. That was the why and here’s the how.

Make a List - the Basics

While these are the basics, my recommendations are based on the assumption that your business will grow. Well thought out criteria for the list keeps the list usable during changes to the company.

Acquisition Date: This is the specific date of purchase or installation.

Acquisition Cost: This is the total cost for acquisition of a fixed asset. This includes the purchase price, sales tax, import duties, delivery charges, and installation charges. Note: All of these costs should be documented and kept in the fixed assets file. I recommend copying the receipts (paper or electronic) and keeping or tagging them with the specific asset file. You don’t want to have to dig through years’ worth of vendor files to substantiate a cost basis!

Serial Number: Note the serial number and model of any asset that has one.

Description: Keep it simple and at the same time sufficient to differentiate it from other assets. You may only have 2′ by 6′ tables now, but go ahead and note the dimensions. You may get a 3′ by 8′ table next month and you do not want to lump them all together.

Asset ID: This is usually a number. It can be made intelligent by, for example, starting all office assets with the number 1 and all laboratory equipment with the number 2, etc. However, it’s often easiest to assign a sequential number; after all, the Fixed Asset Listing will give you all the details.

Location ID: Use locations as they make sense for your business. If you have multiple locations, it could be by city. If there’s a single location, it would make sense to use department or room number.

Make a List - the Beyond the Basics

Depending on the size and complexity of your business, the following can be useful information.

Vendor: Need another one? You know where to start looking!

Type of Asset: Your needs may best define the type. Office? Manufacturing? Vehicle? And within those types, perhaps car versus truck. When a type or types are included on your list, the list can be queried to, say, pull out all the desktop PCs you have when you want to upgrade operating systems across the board. Or the list can give you everything that would have been in a location should that location sustain damage or theft.

Tag the Asset

Trust me on this - tag the asset! At some point in the future, you will want to, or have to, take an inventory of your Fixed Assets. Using the Asset ID established above, create a permanent sticker/tag for the item. Each and every table, chair, computer, and piece of machinery gets its own tag.

That’s it. Make a good list of your fixed assets and give each asset a tag. Note every addition on the list and note every asset of which you sell or dispose. You’ll be covered for insurance and business personal property tax reasons, and your CPA will have the necessary information to record depreciation expenses. We have templates for fixed assets lists so call us if you want to start that list now!

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