term paper about fixed assets
The fixed asset register is an accounting method used by businesses to identify the major resources they hold. Lindsey Lester explains what it is and how it should be used
The reporting of fixed assets should comply with Financial Reporting Standard 15 (FRS 15). The aim of this reporting standard is to ensure that tangible fixed assets are accounted for on a consistent basis. It sets out the principles in making a decision as to whether a tangible fixed asset is stated at cost on a financial statement or at a revalued amount. It is acknowledged within the standard that in some cases no depreciation charge will be made on the grounds that it is immaterial.
What is a fixed asset?
The definition of a fixed asset was discussed in my last article1. As a reminder, these are such things as land, machinery, buildings, motor vehicles (school minibus), IT equipment, etc, where the use of the asset is considered to be long term within the company. One of the tasks of the SBM will be to discuss with governors/directors the threshold value of the resources they wish to add to the fixed asset register and in accounting terms can be referred to as ‘the value of the assets they wish to be capitalised’. The decision of the value should be minuted at the finance committee and this value can vary considerable within individual academies, typically from £100 to £2500. I don’t think there is any particular method when making this decision other than evaluating the assets you hold in school, the value of the item currently and at its purchase price, and the age of the asset. Whatever the value, the asset should be considered to have a life longer than the financial year in which it was purchased.
Net Book Value
Whatever the value, the asset should be considered to have a life longer than the financial year in which it was purchased
An asset should be reported at its Net Book Value (NBV), which is the value of the asset (original cost and known as the ‘book value’) minus its
The reporting of fixed assets should comply with Financial Reporting Standard 15 (FRS 15). The aim of this reporting standard is to ensure that tangible fixed assets are accounted for on a consistent basis. It sets out the principles in making a decision as to whether a tangible fixed asset is stated at cost on a financial statement or at a revalued amount. It is acknowledged within the standard that in some cases no depreciation charge will be made on the grounds that it is immaterial.
What is a fixed asset?
The definition of a fixed asset was discussed in my last article1. As a reminder, these are such things as land, machinery, buildings, motor vehicles (school minibus), IT equipment, etc, where the use of the asset is considered to be long term within the company. One of the tasks of the SBM will be to discuss with governors/directors the threshold value of the resources they wish to add to the fixed asset register and in accounting terms can be referred to as ‘the value of the assets they wish to be capitalised’. The decision of the value should be minuted at the finance committee and this value can vary considerable within individual academies, typically from £100 to £2500. I don’t think there is any particular method when making this decision other than evaluating the assets you hold in school, the value of the item currently and at its purchase price, and the age of the asset. Whatever the value, the asset should be considered to have a life longer than the financial year in which it was purchased.
Net Book Value
Whatever the value, the asset should be considered to have a life longer than the financial year in which it was purchased
An asset should be reported at its Net Book Value (NBV), which is the value of the asset (original cost and known as the ‘book value’) minus its