Fixed Assets Accounting (Overview and Best Practice)

𝐃𝐨 𝐅𝐢𝐱𝐞𝐝 𝐀𝐬𝐬𝐞𝐭𝐬 𝐑𝐞𝐠𝐢𝐬𝐭𝐞𝐫 𝐟𝐨𝐫 𝐲𝐨𝐮𝐫 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐄𝐚𝐬𝐢𝐥𝐲

Purpose:
· Enable to keep track of the date, quantity, unit price, cost, depreciation, and net book value.

𝐇𝐨𝐰 𝐭𝐨 𝐫𝐞𝐜𝐨𝐠𝐧𝐢𝐳𝐞 𝐭𝐡𝐞 𝐅𝐢𝐱𝐞𝐝 𝐀𝐬𝐬𝐞𝐭𝐬?
· Useful life more than 1 year.
· Cannot be easily converted to cash in the short term.

𝐇𝐨𝐰 𝐭𝐨 𝐝𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐞 𝐭𝐡𝐞 𝐝𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧?
· Normally the percentage of the depreciation is based on the asset's useful life.

· Example:
• Motor vehicle (5 years’ useful life - 20%)
• Air Conditioner (10 years’ useful life - 10%)

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐭𝐡𝐞 𝐧𝐞𝐭 𝐛𝐨𝐨𝐤 𝐯𝐚𝐥𝐮𝐞?
· Net Book Value = Asset's Cost - Accumulated Depreciation

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