Fixed Asset Year-end Check List
I had a great conversation with a client this morning about which is more important for year-end processing, ensuring all your assets match, book to floor, or to get them in the system to finalize depreciation?
I always ask all of my clients, “which internal deadline is most important, now”? Typically, getting your data cleaned up enough to process depreciation and getting geared up for year-end is what I recommend the most. While conducting a physical inventory of your assets is extremely important, getting your books finalized for year-end tends to be a bit more important and has a tighter schedule. With a proper system and process in place, you can always reconcile and update your fixed asset records.
Let’s focus on the now.
Regardless of what fixed asset software you are using (or spreadsheets – follow as applicable), there are steps in which you should follow when getting ready to close out your fiscal year.
NOTE: I understand that not every company has a calendar year-end, however, most of these steps work for closing out a quarter as well.
Fixed Asset Check List
- Create a backup or copy of your data before you get started on any sizable project
- Complete all of your Payables to ensure no asset is left behind
- Reconcile to your GL Entries
- Double check your open CIP/WIP/Capital Projects. Place any finished projects into service.
- Make sure they are accurate and reconcile to your payables
- Which ones are carrying over?
- Update your schedules for accurate roll forward balances
- Take the time to thoroughly review your fixed asset sub-ledger
- Make sure all entries are up-to-date with adjustments, impairments, allocations, top-side entries, etc.
- Ensure all asset activities, such as, disposals and / or transfers are processed in the correct period(s)
- Double check your current year fixed asset additions that are ‘bulked’ and split them out, if necessary
- Review your ‘Leasehold Improvements’ or ‘Building Improvements’ for current year
- Should they be split out into different property types (1245 vs 1250)? Now would be the time prior to tax running their calculations based off of your data.
- If you aren’t sure – take the time to look up the invoices, build out documents, etc. It’s worth it!
- After all assets are updated and you know they are accurate, depreciate for year-end
- Once depreciation has been calculated – run a period close (for a spreadsheet – that might be a challenge)
- Reconcile your final accumulated depreciation and expense against your GL records.
- Do they match? GREAT!
- Is there a variance – clean up so that your GL and sub-ledger match (less auditing questions later)
- Ensure that Tax receives your ending balances and details
- If you are using a fixed asset software system that handles the Tax, AMT and State calculations for you, line item by line item, you have a lot less to do.
- If you are not… make sure you run the following reports (in an automated solution) to provide to your tax accountant:
- FYXX Ending Depreciation Expense
- Roll Forward, sorted and sub-totaled by GL Asset Account
- FYXX NBV Detail and Summary by GL Asset Account
- FYXX Disposal Detail
- FYXX Activity by Quarter (assists in determining mid-quarter)
- FYXX Transfer Detail (if applicable)
- Finally – create yet, another backup of your data and save somewhere on your network.
- And finally, take a deep breathe my fellow fixed asset gurus, you made it!