Accounting Basics - Fixed Asset Registers

Keeping a Fixed Asset Register or FAR is an important part of bookkeeping and accounting for any business. A business may spend various tangible fixed assets such as machinery, equipment, land or buildings when carrying out its trade; the fixed asset register helps to have control of these.



All manufacturing companies have to invest in various types of  asset and this expenditure can record a mountainous portion of their ongoing budgets. Hotels, banks and service providers also need to invest in various assets to promote their businesses. Therefore, these businesses need to analyse and understand the amount of money that has been spent in procuring these assets and how it affects their profitability; this is one of the main purposes of the FAR and why it is traditional.



There are positive famous details that are included in the register that are of prime importance; a current serial number, concise explanation of the asset, details of when the asset was bought, the cost of acquiring the asset and the design of payment i.e. paid in beefy by cash or cheque or using a loan design. The register also includes other details such as the rate of depreciation of the asset, the draw of depreciation frail (straight line or reducing balance diagram), the yearly depreciation charge and the obtain book value.



The FAR serves many purposes in business; it provides a first-rate overview of which assets are being faded to generate revenue and their associated costs and it provides information as to which assets need to be replaced because of age or are redundant and could be sold off. In this respect the FAR is a necessary 'reference tool' when a business is planning its capital expenditure budget.



The fixed asset figure that appears on the balance sheet is also backed-up by the details in the FAR, therefore, it should be possible to compare the fixed assets in the management accounts against the register at the destroy of a reporting period. It also acts as a check to form positive that the financial statements at the year demolish correctly think the cost, depreciation and rep book values of any fixed assets.



It has been seen that maintenance of the FAR is extremely considerable for a business. It can be obsolete to track the movements in fixed assets during a financial year, and also plays a crucial role when providing relevant information for management decisions and for the preparation of the financial statements.