A Beginners Guide to the Fixed Asset Register

A variety of accounting methods as well as vital record-keeping processes lie within the broader framework of performing bookkeeping for a company. Some are necessary as a statutory requirement and others as practice of good common sense. The Fixed Asset Register or FAR falls within the first category, whereby the 1956 Companies Act makes it mandatory for companies integrating one into their general business bookkeeping.

 asset register

 

Definition

The asset register is simply a record of fixed assets belonging to a particular company that constitutes its ‘fixed’ assets. The term ‘fixed’ describes assets which cannot be converted easily into cash and are not held with the objective of selling them on. It refers to the owned assets which enable a business to function, either for providing a given service or producing a given product. This is usually land, machinery and property in case of manufacturers and premises and equipment for service providers. It also can encompass the less-tangible assets like copyrights, trademarks, and patents.

Primary Uses

Business owners can find asset register in Greenwich, for instance, and reasons for existence of a distinct one for handling fixed assets are many. They include interests of government that lie mainly in knowing the value of fixed assets for a particular company for taxation purposes, which is why the legislation is present. There are several other gains however to knowing the separate costs of these assets.

Achieving Functionality

The record is rather complex still, as a Greenwich asset register collects highly specific data in a manner that is precise and detailed. Individuals who understand FAR at a glance can tell a lot using this machine. Apart from detailing the nature of fixed assets owned by a company, the bookkeeper has to account for impairment or loss of assets along with logging their changing value and ongoing condition.

Monitoring the origins of large assets inexactness can prove rather problematic for someone keeping the records. This is because the act could require physical verification, which, as suggested by the name would imply having to find and visit each building or piece of equipment physically to confirm both its existence and location. As such, a majority of bookkeepers ‘tag’ each asset into the register using an engraved alpha-numeric identification number that makes tracking simpler. Independent registration numbers would already be available for tracking land and vehicles.

Logging of the value of assets is done in the form of an assigned ‘carrying cost’ and forms part of the recording activity. Valuation needs to be conducted first, however, to ensure carrying out this action accurately. The carrying cost is normally set at the current market value, realizable value or potential sale or distress sale value that basically refers to a scrappage value of an asset.

A majority of accountants and bookkeepers tasked with maintaining the Fixed Asset Register achieve this objective using asset register software. These programs can produce reports on demand along with collate large volumes of information. They do not make the task of keeping the FAR updated simple. However, they certainly can make it somewhat less time consuming, which helps in turn with obtaining accuracy of these required and important records. For more details, just visit our website at http://www.lunicsoftware.com.au/.

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