What are fixed assets and how are related to your business.
Fixed assets are defined as assets which the business owns for the purpose of facilitating business and which has a remaining life span of over one year. These assets will appear on the accounts as part of the balance sheet. If you have a small business that is a limited company, you are required by HMRC to keep accurate records of all of your business equipment in a fixed asset register. This can be as simple as a spreadsheet, a list kept within a notebook, or if you are short on time or have a high volume, you could always use a software package.
Depreciation can be calculated on straight line depreciation or by a reducing balance over any given period of time. Fixed assets are always tangible assets, these are things that you can touch such as a building, machinery, computers, equipment or other items within the business. Intangible items are things that cannot be touched, such as patents, trademarks, copyrights and goodwill.
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Fixed Assets and Accounting
With fixed asset accounting you will need to calculate whenever any asset is disposed of and keep a record of that in the accounts. The way to calculate a tangible asset is to consider its entire price and how many years it will be used and then divide the total price by the years of expected service. This will give you the yearly depreciation rate.
There are many good options of the market in terms of Fixed Asset software packages. Any new software will include this ability, with different packages available depending on the amount of assets you have which will need to be depreciated.
Tracking Fixed Assets
Fixed assets have to be tracked in some way, either by listed all of the registration or product numbers, or by adding a barcode to each item, which would be easier to keep track of in that you can use a computer program to identify the bar code ongoing and as needed.
Last modified: 8th March 2018