Fixed Asset Recording Formats and Details
Asset tracking and management is governed by a set of rules, but the actual process of recording and tracking assets can be ambiguous, dependent on how different industries treat their fixed assets. For example, a manufacturing company and a construction firm both have a number of high value assets, but in the case of the manufacturing these might be immobile, in the form of machinery, while the construction equipment is mobile, capable of being shifted from one site to another as required. So their treatment in the financial records may differ slightly. Yet both sets of assets require tracking for utilization, maintenance, ownership allocation, etc.
Therefore, the process below outlines the requirements in general, but may be adjusted as per the rules applicable. The principal elements of a record for the fixed asset register include the following:
STEP 1: Create a record entry
Usually a unique code will be assigned to each asset in case a fixed asset tracking software is being used. If not, a manual record has to be created by the accountant responsible, assigning a sequential number in the record based on the previous entry.
STEP 2: Description in a specific Format
Describe the asset in one sentence. If this asset is similar to other company assets, use the same description format. Otherwise, consider using a manufacturer-provided description.
STEP 3: Enter Tag Number
Usually a tag/label along with a barcode or a QR Code is created when an asset is taken into the enterprise asset list by the Fixed Asset tracking software. It contains the record entry and a unique number based on asset class, brand, type and sub-type of asset, etc. The tag/label can be a sticker with barcode or QR code, RFID number, etc.
STEP 4: Enter serial number
Enter the manufacturer-provided serial number on the equipment. If you cannot find the serial number, contact the manufacturer to find out where it should be located. Normally any capital equipment is covered by a manufacturer warranty or service agreement and will have the serial number mentioned on it or the invoice.
STEP 5: Note asset location
Asset allocation is usually decided in advance for specific assets such as machinery, equipment, etc. Only in the case of generic assets like furniture, etc. could the asset location be decided after the same is allocated to the department requesting it. In such cases, a default allocation such as storage or warehousing can be assigned. Where possible, specify the location at least by building, and preferably by room. If it is located in the production area, specify the work centre in which it is located.
STEP 6: Assign Responsibility
Ideally an owner should be assigned to the asset in question. State the name or at least the position title of the person who is responsible for the asset.
STEP 7: Record the acquisition date
State the month and year on which the asset was ready for its intended use, and whether it was actually used as of that date.
STEP 8: Enter Value
Enter the total initial capitalized cost of the asset. This should match the amount recorded in the general ledger or fixed asset journal for the asset. Do not use the amount listed on the supplier invoice, since other costs may have been added.
STEP 9: Assign to Specific Asset Class
Asset classes are defined by the system in case of Fixed Asset Tracking software like Tracet. If not, then assign the asset to an asset class by comparing its characteristics to the standard asset classes used by the company. If in doubt, review related assets to determine the classes to which they were assigned, or check with the audit team. This is an important step, since useful life of the asset and depreciation methods are frequently assigned automatically based on asset class.
STEP 10: Enter useful life
Usually the system will assign a useful life based on asset class. If not, enter one manually, as this is critical to measure asset depreciation and value realization.
STEP 11: Approve Record
Have the controller review and approve the file before logging in the entry. Correct any issues noted by the reviewer to prevent future issues in audit.
STEP 12: Store the Record
Make sure the record has been stored electronically. If the information is recorded in an entirely manual system, store it by asset class and then by record number in the fixed asset record files.
Most of the steps outlined above are automated and can be customized if you are using a Fixed Asset Management Solution like Tracet. With a friendly user interface and structure aligned with accounting and ERP systems, Tracet FAMS eases the asset recording process. Users can save complete asset details, add images, documents and set notification/alerts regarding asset insurance, expiry, AMC & CMC. Tracet provides functionalities to track assets based on category, department, location, cost centre and assignee etc. Users are benefited with effective tracking, optimal management and effortlessly complying with rules.