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Fixed asset management is an accounting process that seeks to track the status of company assets, including the location, condition and other distinguishing characteristics of each asset. The idea behind this process is to make sure that the company financial records are constantly updated to reflect the actual status of all fixed assets in terms of current value. There are several steps involved with responsible fixed asset management, including the use of technology to identify like assets from others, track movements of those assets from one location to another, and calculate any depreciation associated with each asset during successive tax periods.
One key element of fixed asset management is always knowing how many units of a given tangible asset the company owns. For example, a manufacturing company would track the number of forklifts owned and operated as part of the normal course of business productivity. Rather than simply maintaining a head count of those forklifts, each asset would be assigned a tracking or serial number. The number would be used to identify the asset in the accounting records, and also track which area or department each lift is currently assigned to as part of the asset tracking process. This allows the company to keep a running inventory and quickly re-allocate assets to other areas when and as needed, without losing track of what is being used where in the overall business operation.
Tracking movement of assets is key to the success of any fixed asset management strategy. Depending on the nature of the business, this may be a very simple process that requires employees to use a sign-in log as equipment and other business assets are moved from one department to another. In other settings, the use of electronic scanners makes it possible to report movements to a central tracking facility, with asset management software used to receive data from the scanners and automatically update the location of each scanned asset. Use of modern technology is especially helpful when tangible assets are sometimes transferred between facilities, since the scanners make it possible to time and date stamp each movement, providing essential data for inventory management and the assessment of taxes for each facility.
Fixed asset management is not just about keeping track of what assets are owned and where they are located. The process also involves assessing the depreciation incurred on each asset during a specific tax period. Again, software today makes the process much easier to manage, since the change in value is identified and recorded using the software program. Doing so makes it possible to quickly determine the amount of taxes due on the asset for any given period. As a result, the company is in a position to always know the current value of assets, plus use historical data to document claims for depreciation filed in past tax periods.
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