Managing your fixed assets requires a lot of knowledge as well as automated systems to help keep track of it all for you. You'll want a software system that can handle all of the long-term tangible property you use in your business, not only inventory but also office equipment and other property. Learning some of the key terms involved in fixed asset management can help you choose the best software system for you as well as better utilize the system you have in place.
Radio Frequency IdentificationRadio Frequency Identification, or RFID, is a fixed asset/inventory tracking system and data collection system that uses radio chip technology. Low power radio waves input and output data. Unlike a barcode system, the RFID does not require line of sight.
Sarbanes-Oxley Act of 2002Sarbanes-Oxley is the legislation passed to protect investors from fraudulent accounting by corporations. Now, each company must comply with those regulations set forth by the law, including the accounting of fixed assets.
Cost segregationCost segregation refers to the process of determining property costs to calculate depreciation values for tax purposes. Cost segregation is used as a tax deferral tool by allowing an acceleration of the annual depreciation rate.
Fixed asset turnover rateFixed asset turnover rate is calculated by net sales divided by total assets. This number indicates if assets are working well in the production of revenue for the company.
Ghost assetsThe term ghost assets refers to those assets that are reported as valid when in fact they are no longer in use. A breakdown in fixed asset management can cause ghost assets.
Depreciation scheduleAn accounting schedule set to show when certain fixed assets depreciate is known as a depreciation schedule. Depreciation is the reduction in value of an asset due to age and general wear and tear on the item. In accounting, depreciation is treated as a non-cash expense.
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