Fixed Asset Management - Investment Decisions, Business Economics & Finance Video Lecture | Business Economics & Finance - B Com

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we will explore the business process
area known as fixed assets also known as
fir learning objectives for this lesson
our meaning of fixed assets process sub
processes under fixed assets process
flow for fixed assets key transactions
fields and key roles key setups and
master data requirements meaning of
fixed assets an asset is a basic unit of
economic value that is expected to
provide benefit beyond a single period
the value of the asset is recorded on
the company balance sheet examples of
assets are cash accounts receivable
inventory prepaid insurance land
buildings equipment trademarks and
certain deferred charges there are two
major asset classes tangible assets and
intangible assets tangible assets are
classified as either
tassets or fixed assets current assets
include inventory and receivables while
fixed assets include buildings property
equipment land machinery and equipment
this tutorial will focus on the class of
tangible assets called fixed assets
subprocesses under fixed assets
functional area the process for fixed
assets can be summarized in following
steps procuring an asset registering /
adding an asset depreciating /
appreciating assets transferring assets
adjusting assets disposing assets
process flow for fixed assets process
fixed assets process can be divided into
six sub processes procuring an asset
registering / adding an asset adjusting
assets transferring assets depreciating
/ appreciating assets disposing assets
these steps are cyclic in nature and
most of them happen in any fixed
management lifecycle except for the ones
shown in green the green ones are
optional steps which may happen in
certain business scenarios now we will
understand each of these steps in detail
step one is procuring an asset an asset
is most often entered into the
accounting system when the invoice for
the asset is entered into the accounts
payable or purchasing module of the
system
assets can also be directly entered in
the fixed asset management system
step two is registering or adding an
asset most of the information needed to
set up the asset for depreciation is
available at the time the invoice is
entered information entered at this
stage include acquisition date placed in
service date description asset type cost
basis - pre XI above a sassette cetera
some information will flow automatically
bust on the asset type selected based on
the relationships that need to be
defined in the system
step 3 is adjusting the assets
adjustments to existing asset
information is often need to be made
events may occur that can change the
depreciable basis of an asset there may
be improvements or repairs made to asset
the either adds value to the asset or
extend its economic life step 4 is
transferring the assets sometimes a
fixed asset is transferred to another
subsidiary reporting entity or
department within the company
these intercompany and intercompany
transfer may result in changes that
impact the assets depreciable basis
depreciation or other asset data this
needs to be reflected accurately in the
fixed assets management system step 5 is
depreciating the assets the decline in
an assets economic and physical value is
called depreciation according to GAAP
depreciation is an expense that must be
periodically reflected on a company's
books and allocated to the accounting
periods
to match income and expenses sometimes
the revaluation of an asset may also
result in appreciation of its value step
six is disposing the assets when a fixed
asset is no longer in use becomes
obsolete is beyond repair
the assert is typically disposed when an
asset is taken out of service
depreciation cannot be charged on it
there are multiple types of disposals
such as abandonments sales and trade ins
any difference between the Book value
and realized value is reported as again
or loss key transaction fields let us
understand some key generic fields that
are used in almost every system or
during the fixed assets process asset
category selection of asset category
enables inheriting the accounting
properties of the underlying category
asset description description of the
asset or enter any notes purchase date
the date of purchase of the asset
accounting date date use to determine
which period this posting belongs to
within the general ledger starting date
determine which starting date the
amortization is calculated for asset
value initial value of an asset usable
life years or months to depreciate the
asset over residual asset value value of
the asset at the end of the depreciation
period depreciate usually a check box to
define if the asset needs to be
depreciated depreciation type the
different methods to calculate
eight depreciation depreciation start
date date from which to calculate for
depreciation postings depreciation
amount the amount of the initial value
to depreciate depreciated value field
indicating how much of the depreciation
value has already been posted to the
general ledger depreciated plan a field
indicating how much value of the asset
will be depreciated until the end of
asset life previously depreciated amount
the amount that has already been
amortized before the asset was entered
into the system
Amata is usually a check box to define
if amortization is calculated ascertain
what ization tracking depreciation
installments total and what ization
field with the total Amata's ation
amount posted for a selected period
accounting specific accounting settings
are for an asset key setups perquisites
some key master elements or setups that
a perquisite to this process before
transactions can take place in a new or
any other system asset category
selection of asset category enables
inheriting the accounting properties of
the underlying category ascertain what
ization tracking depreciation
installments accounting specific
accounting settings are for an asset
depreciated plan a field indicating how
much value of the asset will be
depreciated until the end of asset life
key roles that are required to manage
this process are procure to pay for
asset procurement fire
Nantz this role manages assets in all
aspects company admin used for
configuration of certain elements thank
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