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Fixed
Asset Policy
Fixed
asset policy for a company should be a
guiding instrument for accounting and management. The policy doesn't
have to an
elaborate work, but should be thoughtful of the outcome needed for
fixed asset
information
A policy should include
the following:
- Definition
of what a fixed asset is
- Who
keeps the fixed asset records
- What
the fixed asset records should contain (in summary)
- How
depreciation methods are determined
- Procedure
for new asset acquisitions
- Disposal
methods for assets
A
fixed asset should be defined, especially by dollar
amount. If the minimum amount of an asset is $1000 to be recorded as a
fixed
asset, then that should be stated. Often this policy of a minimum is
guided by tax laws and accounting standards. The owner or manager of a
business may want to track almost everything, this is not unusual.
Thought should be given to the cost of tracking assets over time, and
if it is really worth tracking assets that of lower value.
The department that is responsible for the record keeping should be
mentioned,
along with what the records should contain. Proper acquisition and
disposal
methods should be outlined. If the engineering or maintenance
departments are
to fill out forms for acquisition, disposal, or movement of assets,
this should
be noted.
The policy for determining the depreciation method should be mentioned.
At this
high level document level, detail is not necessary, but should guide
the reader
as to how to acquire the method to be used. Often, the deprecation
method is
determined by outside accounting firms or tax departments. Once a
method is
determined, it is usually not changed, unless the tax laws change.
The policy is a high level document that guides the organization. More
specific
work instructions and forms that need to be filled out for asset moves,
etc should
be developed in addition to the policy.