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      VERIFY Product Details
Q : Why to maintain Fixed Assets Register ?
Ans : The management of a company’s assets is viewed as an increasingly important aspect of corporate governance. Incorrect details of assets can result in under or over charging of depreciation affecting a company’s reported profitability. It allows a company to keep track of details of each fixed asset, ensuring control and preventing misappropriation of assets. It also keeps track of the correct value of assets, which allows for computation of depreciation and for tax and insurance purposes. FAR generates accurate and complete reports that suit the needs of management.
Q : Which assets not to be entered in FAR ?
Ans : Not all assets are capitalized. Keeping in view the concept of materiality, a company may have a policy to capitalize only those assets, which cost more than a specified amount. Similarly, fixed assets, which have a useful life of less than one year, are not capitalized.
Q : How to account for improvements or alterations ?
Ans : In some companies, improvements or alterations made to an asset are capitalized separately in the FAR. This is not correct. If such mistakes are made, it is highly probable that the auditors while undertaking physical verification of assets will notice irreconcilable differences. Where improvements or alterations made to an existing asset justifying capitalization, such additions should be added to the cost of the original.
Q : How to tag/number Fixed Assets ?
Ans : In a large corporation, the task of identifying and locating a specific fixed asset can be difficult unless numbering is scientific, systematic, and up-to-date. A common problem in most companies is the improper maintenance of the FAR. Physical verification of fixed assets becomes a futile exercise unless the FAR is properly maintained.
It would be advisable to use a scientific numbering technique to identify fixed assets. The process of numbering fixed assets is called tagging. An identification number (combination of alphabets, and numbers) is written on the asset. Engraving the identification number on the asset is advisable in the case of Plant & Machinery where there is heavy wear and tear.
A tag verifies the existence of assets and their location, aids in maintenance, provides a common ground for communication between the Accounts Department and the end-users and recording the net book value of asset in case of sale / scrapping.
It is not necessary to tag all fixed assets. Land, buildings and vehicles all have independent systems of tracking in registration papers and survey numbers.
Key Features
1. Years can be separately defined for Companies Act, Income Tax Act
2. Years are user definable
3. Year can be of any duration for Companies Act
4. Year is always financial year for Income Tax Act
5. Depreciation Rates are user definable
6. Depreciation Rates can be defined block wise for Income Tax Act
7. Method for Depreciation can be SLM or WDV for Companies Act
8. Method for Depreciation as per Income Tax Act is always WDV
9. An asset can be categorized up to four level
10.Any number of second/third/fourth level categories can be defined
11.Separate Rates can be defined for second/third/fourth level
12.Three tier location can be defined
13.Can start with closing balances if details not available
14.Can be from the date of acquisition
15.Different Cost for different method