Frequently
Asked Questions
Fixed
Assets
Click on one of the questions below to find the answer.
Fixed
Assets, also known as plant and equipment, are those assets that normally have
a useful life longer than one accounting period.
This longer useful life distinguishes a fixed asset from supplies and
materials, which are normally consumed within a single accounting period.
There
are different types of Fixed Assets. There
are those assets that are purchased on a regular basis, such as desks, furnishings,
computers, software, vehicles, other machinery and equipment used on a daily
basis.
Another
type of fixed assets are those created as a result of a “construction” project,
such as garages, sub-stations, waste treatment plants, park facilities,
etc… A third type of fixed assets
is called “infrastructure” assets. These
include roads, lighting systems, drainage systems, curbs and gutters, sidewalks,
etc…
In general, records are kept for the current value of each of these assets. These records allow your organization to know the total dollar value of all of your assets. As an asset is used, the acquisition costs no longer reflect the current value for the asset. All assets have a “useful life”, beyond which they usually need to be replaced.
The current value of an asset is decreased each day/month/year the asset is used. Depreciation is the term used for the process of calculating the value of the asset that is used up, and then allocating this amount to the accounting periods in which it was actually used.
This means that the current value for an asset is usually considered to be the acquisition costs for the asset minus all accumulated depreciation. Additional factors, such as any improvements (additions) must also be factored into the process of determining an accurate asset value.
When an asset reaches the end of its useful life, and it has been depreciated fully, the remaining value of the asset is called the “salvage value”. This value remains on your books until the asset is fully disposed of. If the asset is sold for an amount greater than the salvage value, it is recorded as “revenue”.
2. Determine the current value for each asset
3. Build individual asset records
4. Input (record) changes in asset values
In order to identify your fixed assets, it is usually necessary to take a physical inventory and conduct a fixed assets survey on a regular basis. Fixed assets, as mentioned previously, can range in size from something as small as a computer monitor to something as big as a public library. Each asset owned by your entity needs to be fully identified.
As a minimum you should record an identifying description for each asset, as well as the approximate year of acquisition. You should also determine a “useful life” for each asset item, and record that as well.
Initially, the process of identifying fixed assets fully may require a substantial investment of time. Subsequent years should require significantly less time and effort.
In order to determine the current value of each asset, you need to know when the asset was acquired and how much it originally cost. You will also need to know if any improvements or additions have been made to the asset, as well as the cost of these improvements. A search of your purchase orders, requisitions, invoices, etc… should provide an excellent source for this information. If these records are unavailable, you can make a careful estimate of acquisition costs based on the current prices for the item.
Once the initial cost for an asset is determined, the next step is to calculate the depreciation for that item. The actual depreciation calculation depends upon thecalculation method your organization uses. Typically, public entities will utilize straight line or percentage depreciation calculation methods. If you are unsure of the process to use, contact your auditor for assistance.
A basic asset record contains information describing and identifying the asset, as well as information describing the value of the asset. Each asset should be uniquely numbered for identification purposes.
You
should always discuss the record-keeping needs with your accountant/auditor
before you begin to design the format.
You will also need to set up a systematic procedure for recording changes in value for an asset over the years. As an asset is depreciated, its current value is reduced. You will also want to record the actual accumulated depreciation amount for each asset. Other factors that could affect the value of the asset include additions or improvements, retirements and removals and costs associated with asset retirements.
From the Fixed Assets Main Menu, select Option 2, File Maintenance.
Type “C” to create a new asset.
After making sure the Department number is correct, enter a unique number for the
new asset. This new Asset Number is completely user-defined and can be any
combination of alphanumeric characters.
Description: Type a user-defined description for this asset. This is the description
that will print on the reports.
Category: Type the category code for this asset. The categories are maintained in a
table in Office Manager, and custom defined for your needs.
The next 3 fields are also maintained in tables in the Office Manager section of the
software. You can also edit the description of these three fields. The description is
maintained in the Department File, also found in Office Manager. Type the appropriate
codes, pressing enter as necessary.
Vendor Name: Type the name of the vendor from whom this asset was purchased.
Insured by: Type the code that links to the insurance company with whom this asset
is insured. Insurance codes are
maintained in Office Manager.
Fund/Dept: Type the Fund and Department number that corresponds to this asset,
from the GL system.
Serial
Num: Type the Serial Number
of this asset.
Manufacturer:
Type the name of the manufacturer of this asset.
User Codes: If applicable, type the user access codes for this asset. You can enter
up to 10 codes. These fields are used to limit or group access to certain assets for
certain users.
Status:
Type “A” for Active, “I” for Inactive and “T” for Terminated.
Plant
Acct:
Type the plant accounting ledger number for this asset if applicable.
Mass Units: If this asset record refers to a group of items, type “Y” or If this asset
record refers to an individual item, type “N”.
Depr:
• # Months: Enter the number of months for which this asset will be depreciated.
This should include the entire depreciable life cycle of the asset, including any
months that have already been depreciated.
• Taken: Enter the number of months the asset has already been depreciated,
•
Method:
Type “S” for straight-line depreciation, or “%” for percentage method.
• Freq: Type the code for how often the asset will be depreciated. These codes
•
%:
If using percentage depreciation, type the percentage, in decimal form
Press the F8 key until you see “Record has been created “at the bottom of the screen.
Verify the department is correct. If it needs changed, use the Up Arrow key to change.
Last Depreciation Date: This field displays the last time depreciation was accumulated. This is just for information and doesn’t need changed.
Depreciation Date: Enter the date you want to accumulate depreciation. This will become the date of the depreciation transaction.
Frequencies: Type the depreciation frequency you want to accumulate for, or leave blank to include all frequencies.
Status: Type the status of the asset records you want to include (A=Active,
I=Inactive, T=Terminated) or leave blank for all.
Fund/Dept: Type the Fund and Department, from screen #1 of the asset record, for the assets you want to include, or leave blank to include all.
Sequence: Enter an “F” to print the report in Fund/Department order. Enter an “A” to print in Asset number order
Report Only: To generate a report only type “Y”. It is suggested you run a report only first to see the results of the accumulation. Type “N” to actually run the accumulation. Both options give a report – “N” actually updates the asset records.
Depreciation Types: Place an “X” next to the methods you want to include. At least one method must be included.
Print if no Depreciation: If you want to print all selected assets, regardless of whether depreciation was accumulated or not, type “Y”. If you only want assets that were depreciated type “N”.
Stop when fully Depreciated: If you want the depreciation to stop, for an asset, when fully depreciated, regardless of the number of months, type “Y”, otherwise type “N”.
Once you select the printer, the report will begin to print. General Information for each selected asset will print as well as the Depreciable Value, the Depreciated Amount and the “new” Current Value. Totals will also print for these three amounts. If this option was ran in “Report Only” = “Y”, make sure to run again,
“Report
Only” = “N”
"Accumulate Depreciation" (By Date) - This is useful when accumulating for partial. This Option uses the acquired date from screen 2 of the asset record.
Note that depreciation can only be ran one department at a time. Though the field is titled “Group”, it actually refers to the department, as defined in Office Manager.
Verify the department is correct. If it needs changed, use the Up Arrow key to change.
Last Depreciation Date: This field displays the last time depreciation was accumulated. This is just for information and doesn’t need changed.
Depreciation Date: Enter the date you want to accumulate depreciation. This will become the date of the depreciation transaction.
From Date: Enter the beginning acquired date you want included in the accumulation.
Thru Date: Enter the ending acquired date you want included in the accumulation
Frequencies: Type the depreciation frequency you want to accumulate for, or leave
blank to include all frequencies.
Status: Type the status of the asset records you want to include (A=Active, I=Inactive,
T=Terminated) or leave blank for all.
Fund/Dept: Type the Fund and Department, from screen #1 of the asset record, for the assets you want to include, or leave blank to include all.
Sequence: Enter an “F” to print the report in Fund/Department order. Enter an “A” to print in Asset number order
Report Only: To generate a report only type “Y”. It is suggested you run a report only first to see the results of the accumulation. Type “N” to actually run the accumulation.
Both options give a report – “N” actually updates the asset records.
Depreciation Types: Place an “X” next to the methods you want to include. At least one method must be included.
Print if no Depreciation: If you want to print all selected assets, regardless of whether depreciation was accumulated or not, type “Y”. If you only want assets that were depreciated type “N”.
Stop when fully Depreciated: If you want the depreciation to stop, for an asset, when fully depreciated, regardless of the number of months, type “Y”, otherwise type “N”.
Once
you select the printer, the report will begin to print.
General Information for each
selected asset will print as well as the Depreciable Value, the Depreciated
Amount and
the “new” Current Value. Totals
will also print for these three amounts.
If
this option was
ran in “Report Only” = “Y”, make sure to run again, “Report Only” = “N”
Before entering any additions you need to consider the following:
The method of depreciation on the current asset
What has been depreciated on the current asset?
What is the value remaining or remaining life on the current asset?
What is the life and value of the addition?
The system will not consider the addition separately when depreciating.
At this time fixed assets is group driven. This means you can not run a report for all the groups at once if you have multiple groups set up.
However, if you only have one group set up then you can run a report for all assets at one time.