Counting And Tracking Your Fixed Assets in 2010

Yes, we are at that time of the year again that causes business administrators everywhere to tremble in their comfortable heels or wingtips (depending on your preference).  No, no, it’s nothing so benign as “bring your child to work day”, its fixed asset inventories – ya know – the counting and tracking of your fixed assets… and all that they entail that often strike fear in the hearts with unerring accuracy.

Everybody counts something: sheep, stars, carbs, calories, what you have.  I and my team, count assets, lots and lots of assets, even the phantoms.  When a fixed asset is lost, stolen, or deemed unusable but still listed as an active fixed asset, it becomes a ghost asset.  Don’t call them Casper, they’re not that friendly.  Ghost assets are a drain on your company’s time, energy, and ultimately your pocketbook.  In fact, since I’m such a smarty pants… 65% of fixed asset data is incomplete, inaccurate, or altogether missing, while 10-30% of fixed assets are no longer even owned.  10% – 30%!  It’s not a quantum leap in logic to then assume that a company might be overpaying taxes and insurance by about 30%… is it?  Ouch.  It is time to exorcise the demons and get these ghosts out of your house and off your books.  And that’s only going to happen with a solid physical fixed asset inventory.

Benefits of Counting and Tracking Your Fixed Assets:

  • Elimination of ghosts assets
  • Minimization of taxes and insurance premiums
  • Reconcile your findings against your balance sheet – start fresh n’ clean
  • Finally automate your depreciation [I would strongly suggest Sage FAS] so you can obtain LAW ABIDING books
  • After all is said and done – you actually KNOW what you have and WHERE it’s located

In the end… all your ducks are in a row, you have smiling and happy administrators, and finally, you can sleep well knowing that your fixed assets are under control.  Good night and happy 2010!

FREE Physical Asset Inventory Needs Analysis Request

Question to the Masses – Physical Asset Inventories

Think of this more like a poll question from the writer; instead of the other way around.  Honestly, I’m just very curious.

  • How often do you/have you performed a physical asset inventory within your organization? 
  • If you have, do you outsource or do it internally?

Please feel free to comment however necessary and I’ll post accordingly.

First 5 people to comment (ahem… a real answer comment), I will email you so I can send you a $10 gift certificate to Starbucks.

Thanks for curing my curiosity!

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Which Fixed Assets Should I Inventory?

Great question! 

When performing a walk-thru to assess a physical inventory that has already taken place, I often run into bar code tags (or tags without bar codes) stuck to just about everything – including doors and walls!

When preparing for a fixed asset inventory, one big question to ask yourself: does it move?  If your fixed asset moves, those are the assets you should be tagging.  The purpose of tagging a fixed asset with a unique identifier (a numbered bar code label) is so that you, or anyone else within your company can easily and quickly identify the asset no matter where it moves – plant A, or plant B for example.  Although it may be obvious to some that you shouldn’t (and sometimes can’t) physically tag a building improvement or the building itself, sometimes, it gets a little confusing.

Other items that may or may not be including in your physical inventory depend on your capitalization policy — but that’s for another day.

Happy hunting for your fixed assets!

A TRUE Fixed Asset Transfer

Most are confused about a true asset transfer and the process behind it.  I’m here to set the record straight!

NOT a true asset transfer:

If you are just physically moving an asset from Location A to Location B but the depreciation is still maintained centrally on one set of books… then you are simply just “moving” your asset.  So instead of thinking too much into it, just update your descriptive fields.

A TRUE asset transfer:

If you are moving your asset from Location A to Location B and they are responsible for keeping their own deprecation books and recording them separately (GL to GL), then this is a true fixed asset transfer.  So, if Location A is stopping their depreciation on the date of transfer; Location B would be picking up the depreciation where the Net Book Value was left off at Location A.  End result: Location B is now responsible for the continuing depreciation until that asset is either fully depreciated or disposed.

If you are having trouble keeping up with this process in your spreadsheet or another depreciation system, let this be known: Sage FAS 100 and 500 Asset Accounting does a FABULOUS job keeping track of this process — with standard reports and all!  A Fixed Asset Manager and an Audits dream come true!

Happy asset tracking!

Baseline Inventory – or – Dynamic Inventory

Baseline or Dynamic is the question; that depends on your situation.

Definitions of both are:

  • Baseline Physical Inventory: No field validation – no database
  • Dynamic Inventory: Real-time field validation – you already have a database

Which one should I perform?  That really depends on: 1) your project, 2) the integrity of your current data , and 3) have you ever performed an inventory yet?

Once you know the answers to those questions, the answer of which inventory is best suited for your project will be staring at you in the face!

Remember, determining if a Baseline or Dynamic inventory is better, this is only ONE piece of the puzzle.

P.S. I personally provide a free 1 hour online Webinar on the Best Practices of a Physical Asset Inventory.  Every second Friday of each month at 11:00 a.m. (PDT).  http://www.paragon-net.com/FAS-online-training/fixed-asset-inventory-webinar.html