Fixed Asset Register

What Is a Fixed Asset Register?

A single line in the balance sheet stands for everything a business owns in the way of plant, equipment, vehicles and fittings, and the register is what sits behind it. Without one there is no way to establish what that figure consists of, no way to compute depreciation by anything other than a blanket rate, and no way to verify that any of it exists.

What separates a working register from a list is whether it can be used in both directions. Somebody should be able to take any line and find the asset, and take any asset and find its line, which requires an identifier, a description specific enough to distinguish similar items, a location at a level somebody can walk to, and a named custodian. Registers fail most often on description, where dozens of lines read identically and no individual line can be matched to any particular machine. The accounting fields then need to be complete enough to recompute the charge rather than merely to report it.

How Fixed Asset Register Applies to a Fixed Asset Register

The register is the record everything else on these pages is applied to, and it holds four groups of field.

• Identification: the tag number as printed on the asset, wording specific enough to separate one machine from its neighbour, plus make, model and serial where those exist.
• Control: site, building and area specified closely enough for a person to reach the asset, the custodian, and when each was last altered.
• Accounting: capitalisation date, cost, life, residual, method, rate and accumulated depreciation, with written down value derived rather than stored.
• Status: in use, idle, awaiting disposal or disposed, together with the last verification date and its result.
• The test of whether it works is bidirectional. Any line should lead to an asset and any asset back to a line, and a register that fails in either direction cannot support a verification.

How Fixed Asset Register Works in Practice

1. On acquisition a line is opened carrying an identifier that matches the label physically attached to the asset, a description distinctive enough to tell it from similar items, its class, where it stands and who answers for it.

1. The financial columns follow: when it was brought in, what it cost, how long it is expected to serve, what will be left at the end, and the method and rate applied, held against the line itself so any individual charge can be recomputed.

1. Depreciation is posted each period and accumulated against the line, with the written down value derived from those inputs rather than stored separately.

1. Movements, custodian changes, impairments and revaluations are recorded as they occur, with the history retained rather than overwritten, so an asset that cannot be found can be traced through where it has been.

1. On disposal the line is closed with the reference and the approval attached, and the register total is reconciled to the general ledger.

Fixed Asset Register: A Worked Example

One line from a Chakan register, shown in full rather than as a table of many assets.

Eleven fields is close to the workable minimum. Every one of them answers a question somebody actually asks: the tag ties the paper to the object, location and custodian make it findable and give somebody responsibility, the date drives depreciation, and the last two rows are what turn a list into evidence. A register carrying cost and depreciation but no location, custodian or verification date reconciles to the accounts and cannot be checked on the floor, which is the common failure. Extra columns are cheap to add and expensive to maintain badly.

Common Mistakes With Fixed Asset Register

Most registers fail on the fields that make matching possible rather than on the accounting ones.

• Repeating an identical generic description across dozens of lines, leaving no way to tie a given row to a given machine.
• Recording a location too broad to walk to, which turns verification into a search.
• Overwriting the location and custodian on each change instead of retaining the history, which removes the trail that would explain a missing asset.
• Storing the written down value rather than deriving it, so the figure can drift from the inputs that are supposed to produce it.
• Deleting lines on disposal without retaining the reference and approval, which makes the register impossible to reconcile backwards.
• Holding the tag number in one column and an internal code in another, which creates two identifiers for one asset and guarantees they will eventually disagree.

Related Stock Audit Terms

Where an asset stops earning, the carrying value has to be tested, so impairment testing is the entry to read next. Every other term in this cluster is listed in the stock audit terms, grouped by the part of the work it belongs to.