Fixed assets are initially recorded in accounting at their purchase value and then are subject to the following types of accounting transactions:
- Periodic depreciation (for tangible assets) or amortization (for intangible assets)– As you use a fixed asset, it will deteriorate and lose value. Depreciation or amortization seeks to reflect this event in accounting. That is, they reduce the value of the asset month by month, until its residual amount is zero.
- Impairment– Technical pronouncement CPC 27 , which deals with fixed assets, determines that the value of the fixed asset cannot be greater than its recoverable value (CPC01). In other words, the cost value of an asset, less its depreciation (book value), must be equal to or less than its recoverable value, that is, the total wealth that it will generate for the company or its sale value in the market.
- Fixed assets held for sale– When a company stops using an asset in its operation and wants to sell it, it must stop calculating its depreciation and record it in a specific account for this case.
You already know what a fixed asset is and how it is accounted for. Now, learn why it is important to manage these assets properly.
WHY IS IT IMPORTANT TO CONTROL ASSETS?
Managing the company’s fixed assets is an important task that can save money and time. It is also an efficient way to prevent theft, plan maintenance and future changes, etc.
It is not uncommon, for example, to find companies that do not know how many tables, computers or furniture they have. This can lead to accounting inconsistencies and incorrect depreciation calculations.
Imagine the following example: The XPTO company has 60 computers and no control over its fixed assets. Due to an incident in the electrical network, 5 of these devices burned and need to be replaced. The accounting will need to write off the 5 damaged items, however, without proper management, this simple task can extend for days.
Although it seems commonplace, writing off a fixed asset is very important for the business, as it can directly impact the calculation of Income Tax . If the accounting does not proceed correctly, the company may suffer severe penalties if it is assessed by the Federal Revenue Service.
Find out the main reasons why the company should invest in control of fixed assets:
1. FACILITATES ALL ACTIVITY
Asset management allows the organization to have greater control over its assets . It can tell you exactly where each item is located, how they are used and when they have been serviced, with just a quick search of the system . Thus, in the event of a readjustment, the entire process will occur in a more fluid and organized manner.
2. PROVIDES SECURITY TO THE DEPRECIATION CALCULATION
Asset management can also be used to ensure that amortization and depreciation rates are accurate. For this, it is very important to correctly control the date of entry and exit of each property, its purchase value and its useful life.
When this is done in an asset control software , the whole process becomes more secure and assertive, preventing the company from being fined by the Tax Authorities , for example.
3. HELPS REDUCE COSTS
Preventive maintenance of fixed assets is a very important factor in reducing costs. If properly planned, it increases the useful life of the assets, in addition to not jeopardizing the company’s operation.
Only with efficient control is it possible to monitor and develop an efficient plan for the maintenance of fixed assets.
DETECTS “GHOST GOODS”
The physical inventory is a very important procedure in fixed asset management. With its realization, it is possible to identify inconsistencies between the physical quantity and the accounting quantity .
The inventory also helps to detect damaged or unused items, which can be repaired, relocated or sold, in order to ensure returns to the company.
5. HELPS REDUCE THEFT
How do you control what you don’t know you have? This is a complicated task, right? If a company does not have an accurate control of its assets, it will hardly notice the disappearance of items of lesser value, or those that it owns in large quantities.On the other hand, with proper management, it will be able to detect all disappearances of fixed assets and create methods to recover them and also so that these incidents do not happen again.
As you can see, there is no lack of reasons for a company to implement asset tracking software. The results can be noticed quickly and the return to the business is guaranteed.