FIXED ASSETS - it is used in the operation in the business

- this system involves how to account for the property, plant, and
equipment of an entity.

OBJECTIVES OF THE FIXED ASSET SYSTEM

1. Dapat kapag nag acquire ka ng fixed asset (capital outlay) dapat with approval and
procedures. Example, is parang nag purchase ka lang ng material. May material
requisition and material order so ganun din sa system na to.

2. For example, nag audit ka and tinanong kung existing yung PPE kapag chineck so
dapat may location, magkano or yung valuation dapat nakamaintain yung accounting
records.

3. Hindi pwedeng mag depreciate ng paiba iba unless applicable. Kasi kapag straight
line, dapat straightline lahat. And that will also serve as a basis sa valuation mo at
the end of the period.

4.
5.

ASSET ACQUISITION

Asset acquisition begins when a department manager determines that an old fixed
asset needs to replaced or that a new fixed asset is warranted. So ano yung
judgement niya to obtain a new asset? Number one, obsolete meaning hindi na sya
ginagamit or out of date, number two, fully depreciated na meaning hindi siya
productive.

So kapag na identify na ni department manager that there is need to obtain a new

asset or replace the existing one, authorization and approval procedures over the
transaction will depend on the asset’s value. So dapat alam mo yung asset value mo.
Pwede rin na yun yung basis mo kung bakit ka magre-replace ng asset. The
department managers typically have the authority to approve purchases below a
certain materiality limit. And that capital expenditures above the limit will require
approval from the higher management levels. So meron kang pre-specified limit
kapag maga-authorize ka ng sarili mong acquisition pero kapag lumampas sa limit it
will be authorized by the next level of the management.