2. “Fixed Assets are the 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 management is an
accounting practice that includes
tracking, deterrence from theft,
safeguarding and accurate evaluation
of fixed assets.
4. Recording of
Fixed Assets
Tracking of
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 should be 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 tracking is 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 fixed asset 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 of depreciation 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 fixed assets 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 of fixed 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.
