Fixed Assets
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From Wikipedia, the free
encyclopedia Fixed asset, also known as a non-current asset or as
property, plant, and equipment (PP&E), is a term used in accounting for
assets and property which cannot easily be converted into cash. This can be
compared with current assets such as cash or bank accounts, which are
described as liquid assets. In most cases, only tangible assets are referred
to as fixed.
Moreover, a fixed/non-current asset can also be defined as an asset not
directly sold to a firm's consumers/end-users. As an example, a baking
firm's current assets would be its inventory (in this case, flour, yeast,
etc.), the value of sales owed to the firm via credit (,i.e. debtors or
accounts receivable), cash held in the bank, etc. Its non-current assets
would be the oven used to bake bread, motor vehicles used to transport
deliveries, cash registers used to handle cash payments, etc. Each
aforementioned non-current asset is not sold directly to consumers. |
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These are items of value which the organization has bought and will use for
an extended period of time; fixed assets normally include items such as land
and buildings, motor vehicles, furniture, office equipment, computers,
fixtures and fittings, and plant and machinery. These often receive
favorable tax treatment (depreciation allowance) over short-term assets.
According to International Accounting Standard (IAS) 16, Fixed Assets are
assets whose future economic benefit is probable to flow into the entity,
whose cost can be measured reliably.
It is pertinent to note that the cost of a fixed asset is its purchase
price, including import duties and other deductible trade discounts and
rebates. In addition, cost attributable to bringing and installing the asset
in its needed location and the initial estimate of dismantling and removing
the item if they are eventually no longer needed on the location.
The primary objective of a business entity is to make profit and increase
the wealth of its owners. In the attainment of this objective it is required
that the management will exercise due care and diligence in applying the
basic accounting concept of “Matching Concept”. Matching concept is simply
matching the expenses of a period against the revenues of the same period.
The use of assets in the generation of revenue is usually more than a year-
that is long term. It is therefore obligatory that in order to accurately
determine the net income or profit for a period depreciation is charged on
the total value of asset that contributed to the revenue for the period in
consideration and charge against the same revenue of the same period. This
is essential in the prudent reporting of the net revenue for the entity in
the period.
Net book value of an asset is basically the difference between the
historical cost of that asset and it associated depreciation. From the
foregoing, it is apparent that in order to report a true and fair position
of the financial jurisprudence of an entity it is relatable to record and
report the value of fixed assets at its net book value. Apart from the fact
that it is enshrined in Standard Accounting Statement (SAS) 3 and IAS 16
that value of asset should be carried at the net book value, it is the best
way of consciously presenting the value of assets to the owners of the
business and potential investor. |
More related links about
Fixed Assets
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Fixed assets
management is an accounting process that seeks to track
fixed assets for
the purposes of financial accounting, preventive maintenance, ...
en.wikipedia.org/wiki/Fixed_assets_management
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Bassets
fixed asset
software is the perfect solution for
fixed asset
management, asset depreciation, asset tracking, GASB 34 and tax
reporting.
www.bassets.net/
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Offers methodology, processes, procedures,
systems, and tools necessary to complete virtually any
asset inventory
engagement.
www.assetmanagementresources.com/
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Sage
Fixed Asset
Software (Sage FAS) by Hagel and Company, FAS software provider to
businesses throughout Seattle, San Francisco, Las Vegas, Boise, ...
www.fixedassetsystems.com/ -
- [PPT]
File Format:
Microsoft Powerpoint -
View as HTML
Responsible for management, oversight and reporting for all University
equipment assets; Administrators of
Fixed Asset
Module of Oracle and responsible for ...
www.virginia.edu/finance/finanalysis/fixed_assets.ppt
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