Fixed asset management

Fixed asset management

• 1.
  BY: Nikhil KumarVarshney [email protected] Fixed Asset Management
• 2.
  “Fixed Assets arethe assets held by enterprises which are used in manufacturing of goods or providing services or any other use but not for sale in ordinary course of business.”For example- Machinery, Furniture, Vehicles, Computer etc.
• 3.
  Fixed asset managementis an accounting practice that includes tracking, deterrence from theft, safeguarding and accurate evaluation of fixed assets.
• 4.
  Recording of Fixed Assets Trackingof Location of Fixed Assets. Maintenance of Fixed Assets. Accurate valuation of Depreciation Various Reports under various regulation. Physical verification of fixed assets at regular intervals.
• 5.
  Following points shouldbe considered while recording fixed assets:- • All expenditure upto installation of asset should be capitalized. • VAT and Excise duty included in the invoice should be considered for input tax credit and CENVAT.
• 6.
  Fixed asset trackingis an important worry of each entity irrespective of size of entity. If an accurate method is not followed, enterprises may loose control on them. Therefore, it is necessary for an entity to track its fixed asset so that it may get control over its fixed assets. Following methods can be used for tracking of fixed assets:- • Bar coding system. • By providing unique serial number to each asset. • Department and cost centers wise.
• 7.
  Maintenance of fixedasset is also an important issue for an entity. If proper care is not undertaken it may lead to sudden breakdown in the enterprise. Following points must be well thought-out for maintenance of fixed assets:- • Maintenance of asset should be reviewed at regular interval. • Before maintenance warranty and insurance of assets should be reviewed. • Expenses on maintenance should be recorded correctly for accounting and tax purposes.
• 8.
  Accurate valuation ofdepreciation is also an important issue. Depreciation should be computed as per rules and regulation for the time being in force for accounting and tax purposes e.g. as per The Companies Act, 2013, Income Tax Act, 1961. Following points must be considered for accurate computation of depreciation:- • It must be computed as per AS-6 “Depreciation” and rules given under companies act for accounting purposes. • It must be computed as per section 36 of the Income Tax Act, 1961 for Income Tax purpose.
• 9.
  Reporting of fixedassets is mandatory under various laws in different manner. So, It is necessary to keep proper records to prepare and present various reports required under different laws. Reporting of fixed assets is required in following manner:- • Fixed assets schedule in financial statement as per Companies Act. • Depreciation chart as per Income Tax Act, 1961. • Reporting under Form 3CD for Tax audit under Sec. 44AB of Income Tax Act, 1961.
• 10.
  Physical verification offixed assets is also a very essential part of Fixed asset management. Physical verification should be done at regular interval so that thievery of the assets can be stopped up. There are many benefits of asset tracking and verification as:- • Reduction of theft of assets. • Saving in time and money in replication of asset between departments. • Monitoring of asset movement between locations.