Commonly asked questions regarding all things fixed assets. We will keep posting as we go.
Let’s discuss fixed asset’s!
How should we be maintaining our sub-ledger effectively?
Many companies start down the path of looking for an automated solution to get out of spreadsheets. Agree 100%. Moreover, many only base their selection by GAAP depreciation, reporting, and functionality. This is the number one mistake. Companies should be selecting a robust solution that can also depreciate for Federal Tax, State, ADS, budgeting, and more. Keep all your eggs (ahem… fixed assets) in one basket! Always!
What other avenues are accurate fixed asset records used for?
Glad someone asked! Other than the obvious, GAAP. Keeping a robust fixed asset management solution that can, not only take care of a full assets life cycle, but also be a repository to report and analyze on Property Taxes, Insurance assessments and claims, Impairment studies, local audits, physical inventories, state and use tax, third party reporting requirements, repair and maintenance, IRS and State Auditors, and just safeguarding of assets.
To Bulk Assets or Not to Bulk?
Not a fan of bulking assets into one line item. Sometimes furniture and fixtures make sense, or computer equipment. Depends on a companies threshold, policy, and purchasing. That being said, componentization and creating discrete assets play a huge role in fixed asset management. Componentization is the break down of assets that might be part of a large assets; whereas discrete assets are ensuring assets are broken out of a project that are different in classification/type, property type, lives, etc.