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Maintain asset register

An Asset Register is a comprehensive inventory of an organisation's tangible assets. It is a document that lists all of the
assets owned by an organisation, along with information about each asset, such as its location, condition, value, and other
relevant details. An Asset Register helps organisations to manage their assets more effectively, make informed decisions
about their use and maintenance, and plan for their replacement or disposal.

It is a valuable Asset ID and Tracking Tool that can be used for commercial decision making and Financial Reporting
purposes. Think of it like a stock-take: identify everything you have, itemise it, label it, and document it.

To complete an Asset Register, you must conduct a full site inspection and record the following details:

The make, model, and serial number of each item

The physical location within the premises

A description of its physical attributes and condition

The asset class or category

The Asset Register can then be expanded to include:

Purchase Details (Dates, Cost, Supplier)

Warranty Information

Servicing Schedule

Effective Life, Written Down Value and Depreciation Schedule

Defects and Maintenance Registers

It is a meticulous and painstaking task to produce an Asset Register, but it results in an

invaluable document that can be used for a multitude of purposes, including stock taking,
storing warranty information, and having a record of the value of your assets for
………………………………………….
Fixed assets register keeps a detailed record of an organization’s fixed assets. It helps maximize the utility of an
asset, avoid duplicate purchases, ensure legal compliance and manage auditing requirements.

…………………………………………..
AR allows you to keep track of your assets and provides a fair estimate of their worth. It meets your
taxation, statutory and sale-of-business obligations. It is also an appropriate place to record serial
numbers, make, model, etc.
Your organization needs an asset register to:
 process the purchase of fixed assets in accordance with your organisation's authorisation and
record-keeping procedures
 maintain an adequate accounting records of assets-cost, description, and where they are kept in
the organisation
 maintain accurate records for depreciation
 provide management with information to help plan future asset investments
 record the retirement and disposal of assets.
You can start your asset register by recording all physical assets, regardless of the funding source.
The types of physical assets that need to be recorded include:
 office equipment ; motor vehicles ;furniture ; computers ; communications systems ;equipment
After that, check each asset item at least once a year.
As a general rule, record each asset separately. The exception is multiple assets that combine to
perform one function if the value of the individual components is less than $3,000 but the total value of
the asset is more than $3,000. Examples are personal computers consisting of a monitor, keyboard and
central processing unit, or a set of books and periodicals.
 Treat replacing assets as a maintenance cost. When the purchase cost is not known, record the
asset at the cost of a comparable item at current prices.
 Record assets in the register in the month they are purchased. The cost should include
installation costs, computer cabling, transportation and other associated costs incurred to make
the asset usable. Use purchase orders, invoices and delivery dockets to provide the detail.
 You also need to record leased assets. There are two types of leasing arrangements: operating
lease and finance lease. A finance lease finances the cost of a leased asset. These finance leases
must be recorded in the assets register. An operating lease is when the leased item is 'given
back' at the end of the lease period.
 When you dispose of an asset-when you sell it, give it away or throw it away-update your asset
register to include the date of disposal, the disposal amount and the method of disposal. Cease
depreciation at the end of the month you disposed of the asset.
 Treat trading in an asset as a disposal. When you sell an asset, record the proceeds in your
financial records as well as your assets register.
 Don't delete assets from your assets register until after the end of the financial year as the
information needs to be incorporated into the annual statement of your financial position. At the
beginning of the next financial year, record disposed-of assets separately.
The board need not involve itself directly with the conduct of the assets register, but must be satisfied
that a reliable system exists and is adhered to.

What is the purpose of maintaining fixed asset register?

 It helps businesses keep track (evidence) of all their assets, which is essential for effective asset
management. By having a complete and up-to-date list of fixed assets, businesses can more easily
monitor and control their assets, which helps prevent theft, loss, or misplacement.

What is the purpose of maintaining an asset register?

What is a fixed asset register format?

A Fixed Assets Register (FA Register) is a register which shows all the permanent assets owned
How to calculate depreciation?
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organization. Thethis:
looks like register shows the quantity and value of things like chairs, tables, fans,
furniture, vehicles, land, buildings etc. It may also show where these assets are kept or used.
1. (Asset cost - salvage value) / useful life = depreciation value per year.
2. An office buys an office cubicle system for $15,000. ...
3. (15,000 - 500)
The purpose of/an
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= $1,450.
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4. location, price, $1,450
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1. Career development
2. How To Calculate Depreciation (With 4 Methods and Examples)

How To Calculate Depreciation (With 4

Methods and Examples)
Making an expensive purchase for a company for equipment or property can often result in a tax
deduction for a business. Tax rules require you to spread the total cost of asset purchases you want to
deduct as a business expense over its estimated useful life. To accomplish this, you can use one of
several ways to calculate depreciation.
steps and examples for how to calculate it using four different methods.
What is depreciation?Depreciation is an accounting technique used to allocate the cost of an asset over
time, usually its useful life, which is defined as an estimate of how long in years the asset is likely
to remain in service—or useful—and generate revenue. When a company purchases an asset, you can
deduct that cost as a business expense, but federal tax regulations require you to spread the total cost
over its estimated useful life.
Depreciation shows the expense of using an asset over time and is unrelated to its physical condition.
An example would be if you purchased a piece of machinery for a company at a total cost of $1,000.
The average useful life of that piece of machinery is 10 years, so it would decrease in value by 10%
each
 What is depreciation?
 mon method and is used to split the value of an asset evenly during its useful life.
 Double-decliningDepreciation is an accounting technique used to allocate the cost of an asset over
time, usually its useful life, which is defined as an estimate of how long in years the asset is likely
to remain in service—or useful—and generate revenue. When a company purchases an asset, you can
deduct that cost as a business expense, but federal tax regulations require you to spread the total cost
over its estimated useful life.
 Depreciation shows the expense of using an asset over time and is unrelated to its physical condition.
An example would be if you purchased a piece of machinery for a company at a total cost of $1,000.
The average useful life of that piece of machinery is 10 years, so it would decrease in value by 10%
each year.
 Related: What Is Depreciation? Definition and Example

 How to calculate depreciation

 Here are four primary ways of calculating depreciation:
 Straight-line depreciation: This is the most com balance depreciation: This method is used to depreciate
more of an asset's value immediately after you buy it and less value later in its life.
 Sum-of-the-year digits depreciation: This method is used to depreciate more of an asset's cost in the
earliest years of its useful life.
 Units of production depreciation: This method is used to depreciate a piece of equipment based on how
much work it does or can do.
Here's how to calculate the depreciation of an asset using each of the four methods, with an example
for each one:

Straight-line depreciation
Smaller businesses often use the straight-line depreciation method if they don't have an accountant or
tax advisor. To calculate using the straight-line depreciation method:
1. Subtract the salvage value from the asset cost.
2. Divide that number by its useful life.
The formula looks like this:
(Asset cost - salvage value) / useful life = depreciation value per year
Below is an example of using straight-line depreciation:
An office buys an office cubicle system for $15,000. The salvage value of the system is $500, and it has
a useful life of 10 years. To find out how much you can deduct in taxes each year, you use the formula:
 (15,000 - 500) / 10 = $1,450
You can deduct $1,450 per year for the 10 years of the system's useful life.
Related: What Are Depreciation Expenses? (And How To Use Them)

Double-declining balance depreciation

If you want to recover more of an asset's early value, you may choose to use the double-declining
balance method of depreciation. To calculate using this method:
1. Double the amount you would take under the straight-line method.
2. Multiply that number by the book value of the asset at the beginning of the year.
3. Subtract that number from the original value of the asset for depreciation value in year one.
4. Repeat the first two steps.
5. Subtract the new number from year one's value to find year two's value.
6. Continue repeating steps for subsequent years.
The formula looks like this:
(2 x straight-line depreciation rate) x book value = declining balance per year
 Where depreciation rate = 1 / useful life of asset x
Below is an example of using double-declining balance depreciation:
A $15,000 office cubicle system depreciates over 10 years, so its straight-line depreciation rate is 10%.
For the first year of the system's life:
(2 x .10) x 15,000 = $3,000
You can deduct $3,000 of the system's value in its first year. For year two, the value is now $12,000 so
for year two:
(2 x .10) x 12,000 = $2,400
You then can deduct $2,400 from the first-year value of $12,000 to find the second-year value of
$9,600. You would continue the process for years three through 10.
Related: Depreciation vs. Amortization: Definitions, Differences and Examples

Sum-of-the-year digits depreciation

If you decide you want to recover more of an asset's upfront value but with a more even distribution
over time, you can use the sum-of-the-year digits method (SYD). To calculate, follow these steps:
1. Add up the digits in the asset's useful life. If the life is 15 years, you add 1 + 2 + 3 + 4 + 5 = 15 is the
SYD.
2. Divide the asset's remaining lifespan by the SYD.
3. Subtract the salvage value from the asset cost
4. Multiply the two numbers.
The formula looks like this:
(Remaining lifespan / SYD) x (asset cost - salvage value) = SYD depreciation the first year
Below is an example of using SYD:
An office cubicle system costs $15,000, has a salvage value of $500, and depreciates over a 10-year
useful life. Adding the digits for the system's useful life would be: 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 +
10 = 55
(10 / 55) x (15,000 - 500) = $2,636.36 for the first-year deduction
Each year, the system's lifespan reduces by one, so the second-year equation would be:
(9 / 55) x (15,000 - 500) = $2,372 for the second-year deduction
Related: What Is an Asset?

Units of production depreciation

Businesses that want to deduct a piece of equipment that creates a product can use the units of the
production method of depreciation. You can also use this method if you can measure the usage of the
asset in hours. To calculate using this method:
1. Subtract the salvage value from the asset cost.
2. Divide that number by the estimated number of hours in the asset's useful life to get the cost per hour.
3. Multiply the number of hours (or units of production) in the asset's useful life by the cost per hour for
total depreciation.
The formulas are:
(Asset cost - salvage value) / hours of useful life = units of production depreciation cost per hour
Cost per hour x hours of useful life = total depreciation
Below is an example of using units of production depreciation:
Jonathan's House of Tabletops purchases a material-cutting machine for $75,000. It has a salvage value
of $6,000 and a useful life of 90,000 hours. To find the units of production cost per hour:
(75,000 - 6,000) / 90,000 = $.76 cost per hour
To find the total depreciation of the machine:
.76 x 90,000 = $69,000
The machine depreciates by $69,000 during its useful life.
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Why is depreciation important?

Depreciating assets means you may have more control over your finances because you can determine
how much you deduct in taxes for those assets each year. Depreciation can help you spread out an
enormous expense for a company or your personal finances over multiple years, instead of it showing
up in your accounting books as one major expense in a single year.

LO-2 Record journal entries for balance day adjustment

What Is an Adjusting Journal Entry?

An adjusting journal entry is an entry in a company's general ledger that occurs at the
end of an accounting period to record any unrecognized income or expenses for the
period.

Types of Adjusting Journal Entries

In summary, adjusting journal entries are most commonly accruals, deferrals, and
estimates.

Accruals
Accruals are revenues and expenses that have not been received or paid, respectively,
and have not yet been recorded through a standard accounting transaction. For instance,
an accrued expense may be rent that is paid at the end of the month, even though a firm
is able to occupy the space at the beginning of the month that has not yet been paid.

Deferrals
Deferrals refer to revenues and expenses that have been received or paid in advance,
respectively, and have been recorded, but have not yet been earned or used. Unearned
revenue, for instance, accounts for money received for goods not yet delivered.
Estimates
Estimates are adjusting entries that record non-cash items, such as depreciation
expense, allowance for doubtful accounts, or the inventory obsolescence reserve.

What Are the Types of Adjusting Journal Entries?

The main two types are accruals and deferrals. Accruals refer to payments or expenses
on credit that are still owed, while deferrals refer to prepayments where the products
have not yet been delivered.

What Is the Difference Between Cash Accounting and Accrual Accounting?

The primary distinction between cash and accrual accounting is in the timing of when
expenses and revenues are recognized. With cash accounting, this occurs only when
money is received for goods or services. Accrual accounting instead allows for a lag
between payment and product (e.g., with purchases made on credit).
What are the 4 adjustments?

There are four types of account adjustments found in the accounting industry. They are accrued
revenues, accrued expenses, deferred revenues and deferred expenses.