ERP Solution for Fixed Asset Management

Examples of general categories of fixed assets are:

	Buildings
	Computer equipment
	Computer software
	Furniture and fixtures
	Intangible assets
	Land
	Leasehold improvements
	Machinery
	Vehicles

Fixed assets are initially recorded as assets, and are then subject to the following general types of accounting transactions:

	Periodic depreciation (for tangible assets) or amortization (for intangible assets)
	Impairment write-downs (if the value of an asset declines below its net book value)
	Elimination (once assets are disposed of)

A fixed asset does not actually have to be “fixed” but it cannot be moved. Many fixed assets are portable enough to be routinely shifted within a company. Thus a laptop computer could be considered as a fixed asset (as long as its cost exceeds the capitalization limit).

The depreciation of a fixed can also be done by simply allocating the expense generated by the uses of an asset. It is the wear and tear of an asset which is basically dependent on the usage. It is also the cost of the asset which is less than the salvage value over its estimated period.

Purpose

The primary purpose of the Fixed Asset System is to document capital assets and repair information in an online environment, so specific online procedures can be performed in seconds rather than the hours required by traditional batch methods of computer processing. This fixed asset system performs the basic fixed asset objectives by providing a complete and accurate record of all asset transactions affecting each piece of equipment and property. This fixed asset system also maintains an audit trail for verification of previously entered asset information.

The Fixed Asset System (FAS) is a computerized general purpose system designed to perform various record keeping activities associated with the capital assets owned in most business enterprises and institutions. Capital assets cover real property (land and buildings), personal property (equipment and vehicles) and intangible property (copyrights, computer software and patents). Also the equipment that is recorded as an expense and not capitalized can be entered into this fixed asset system to provide a complete inventory of all business assets.

Advantages

	Asset inventory software tracking enables business owner’s tο track thеіr resources electronically. It іѕ a highly efficient аnd precise method tο manage inventory. Bу assigning each item within thе organization’s inventory a bar code, businesses саn easily track thеіr assets ѕο thаt thеу wіll discover precisely whаt thеу hаνе gοt іn stock аt аnу time.
	Thе knowledge thіѕ application provides fοr businesses do nοt hаνе thе time tο control thе inventory manually еνеrу single day. Thіѕ will save our money bесаuѕе іt significantly decreases thе quantity οf effort needed tο effectively run a company and manage its assets frοm day tο day.
	Companies that want to save time аnd money wіll have tο invest іn asset inventory tracking software tο аѕѕіѕt thеm in controlling thеіr Company’s inventory assets іn a regular аnd productive method. Once аn asset іѕ given a barcode аnd thаt barcode іѕ entered іntο thе program, this software will automatically track.
	Businessmen need not spend their valuable time figuring out exactly whаt assets thеу hаνе gοt οn hand. This simple software program monitors іt fοr thеm. Thеу саn basically maintain thеіr inventory bу quickly looking аt thе screen throughout thе day. Thе computer software саn dο thіѕ electronically. But prior to that, thеy would require ѕοmе time to install thе software аnd barcode symbols.
	Asset inventory software tracking саn bе essential fοr аnу productive company bесаuѕе іt enables companies’ аnd thеіr employees’ tο commit thеіr time for managing thе business, rather than continuously monitoring assets. Following thе initial expenditure οf money tο gеt thе solution аѕ well аѕ occasional upgrades аnd upkeep issues, thе expenses аrе minimal іn comparison tο thе amount of time іt can take for аn employee to carry out thе identical task manually.
	Businessmen whο сhoose to use asset tracking software won’t require workers exclusively tο watch assets аnd evaluate inventory bеcause thе program monitors assets automatically. Thіѕ саn save time as well as money thаt allows assets tο bе devoted somewhere еlѕе. Thеѕе saved money mау bе used tο expand thе company rаthеr thаn track inventory.
	Businesses ѕhould invest іn asset inventory software tracking before thеу open thеіr doors fοr thе general public. Starting wіth inventory tracking software, thіѕ information can be relevant enough tο obtain аnd manage.
	Data is quick and efficient when it comes to business financial records that gives us unprecedented control of the entire company’s fixed asset inventory.

Disadvantages

Asset Costs
Companies initially record fixed assets on their balance sheets for the amount of an asset’s purchase cost. Because of inflation and other changing market conditions, the cost of the same asset can change over time. The fixed-asset turnover ratio will appear to be higher for the old company than for the newer firm. But the higher fixed-asset turnover ratio may not necessarily be a better asset or more effective management for the old company.

Asset Depreciation
Initial asset costs are reduced over time by asset depreciation to reflect the decrease in the asset’s value. When companies use the fixed-asset turnover ratio for logical comparisons of its own performance, the asset-depreciation factor may destroy the comparative results for different years. The fixed-asset turnover ratio may appear to be higher in later years than in early years, because of the decreased net fixed-asset value as the denominator in the ratio calculation. Therefore, the higher fixed-asset turnover ratio in later years may not indicate that management has improved its performance.

Accounting Practice
Different companies may have differing accounting policies, which could cause incorrect results when using the fixed-asset turnover ratio in a comparative analysis between companies. For example, a company may adopt an accelerated depreciation policy to charge higher depreciation during an asset’s early use, while another company may use the normal straight-line depreciation method to register an average depreciation throughout an asset’s life. As a result, the net asset value after depreciation for the first company is mostly lower than that for the second company over the same period. Comparatively, the fixed-asset turnover ratio for the first company is mostly higher than that for the second company, giving a false impression of better management by the first company.

Sales Revenue
Temporary changes in sales revenue may also lead to an incorrect fixed-asset turnover ratio, which may reduce the use of the ratio in comparative analysis. For example, increase in seasonal sales in one period does not suggest more effective management, even though the fixed-asset turnover ratio is now higher as a result of the increase in revenue from seasonal sales. Companies may see a decrease in their fixed-asset turnover ratios in periods immediately after the seasonal sales. Without taking any seasonal adjustments, a comparative analysis of a company’s performance over those periods may incorrectly point at a decrease in management effectiveness.

Fixed Assets calculation
A fixed asset having a useful life of 3 years is purchased on 1 January 2013.Cost of the asset is $2,000 whereas its residual value is expected to be $500.Calculate depreciation expense for the years ending 30 June 2013 and 30 June 2014.

Depreciation expense per annum shall be: ($2000 − $500)/3=$500 p.a.
Depreciation expense for the year ended 30 June 2013: $500 x 6/12 = $250
As $500 calculated above represents the depreciation cost for 12 months, it has been reduced to 6 months equivalent to reflect the number of months the asset was actually available for use.
Depreciation expense for the year ended 30 June 2014: $500 x 12/12 = $500

Similarities between fixed assets and fixed assets in FactsERP
Now the fixed assets module has the following features:-

Multiple Depreciation Methods
Here we can either choose from a huge number of predefined depreciation schedules or we can create our own. Each depreciation method can include different averaging conventions as well recovery periods.

Purchase Order Integration
Integration with the Purchase Order Module can be used for converting purchases into fixed assets without re-entering data. Eligible purchases are automatically displayed to simplify the conversion process.

Tax Benefit Support
This feature provides multiple depreciation books, multiple calendars, special depreciation bonuses, and tax benefit recapture capabilities that can be used for accurate complex tax rules.

Multiple Asset Types This feature is used to manage multiple property types which includes owned property, leases, rentals, and granted property. It can also track assets that are leased or rented to others.

Multiple Averaging Options
This features can be used for selecting different averaging methods such as full period, mid-period, next period, modified half period, full quarter, full year, full day, and more.

Fixed Asset Tools
Asset manipulation tools can be used for making mass changes to several fixed assets at once. These tools include processing depreciation schedules, releasing fixed asset transactions, converting purchases to fixed assets, and generating fixed asset calendars.

Fixed Asset Classes
This feature is used for creating fixed asset classes to group assets and simplify order entry for commonly used schedules.

Fixed Asset Reporting
The Fixed Asset module provides several fixed assets reports that manages asset acquisitions, disposals, asset balances, asset net values, future projections, and depreciation transactions. If a person wants to review his detailed transactions he can do so by viewing inside the summary report.

Audit Trail
The Fixed Assets module provides a complete audit trail of all related transactions. A complete history of all transactions is maintained so the person can view the details of all his entered or imported transactions, including the person who has entered the transaction and the person who has modified the record. The auditing process is simplified by linking notes and supporting electronic documents directly to transactions.