Asset analysis in accounting is an integral part of the process of preparing a company's balance sheet. One of the four financial statements in accounting, the balance sheet shows a snapshot of the financial state of the company expressed by the expanded accounting equation: assets equal liabilities plus owners' equity plus (revenue minus expenses). Assets are classified as either as current or long-term.

Current assets are those that are either currently liquid or could be converted to cash in less than a year. Examples include cash, inventory, receivables (money due from borrowers, clients or customers) and short-term stock and bond investments. Examples of long-term assets include the structures, land, equipment, vehicles, furnishings and fixtures belonging to the company. In asset accounting, real estate being held for speculation, trademarks and patents are also counted in the fixed asset analysis as long-term assets. If your company is in need of an accounting asset analysis, use the following as a guide.

1. Have a certified public accountant (CPA) manage your business assets in accounting and prepare your financial statements.

2. Learn asset analysis in accounting basics by getting training in accounting.

3. Depreciate your company assets using one of the available software tools.

Action Steps
The best contacts and resources to help you get it done

Hire a CPA for your accounting, asset management and tax preparation needs

Maintaining records and performing all the accounting tasks involved in running a business can be daunting. A CPA will bring knowledge and experience to the table in providing the accounting services you need, bookkeeping, asset analysis, preparation of financial statements, tax planning and preparation services and so forth.

I recommend: DirectoryCPA is an accounting directory where you can find CPAs, accounting associations, bookkeepers and more. AccountingPage provides a handy directory of CPA firms.

Acquire training on analyzing accounting assets

The outlook for the accounting career field is promising. The U.S. Bureau of Labor Statistics predicts a 22% increase in accounting jobs by 2014. It is likely that an increase in the number of businesses, changing regulations and financial laws and a heightened level of scrutiny of business finances will bolster growth in the accounting job market.

I recommend: BIZHotline provides training courses on every facet of accounting, including this course called Business Accounting: Accounting for Assets. Penn Foster College offers AS and BS degree training in accounting online.

Purchase fixed asset depreciation software to calculate the loss of fixed asset value over time

One important aspect of accounting for a capital asset is to account for the loss in value over time, known as depreciation. Whether you choose straight line, sinking fund, double declining balance (DDB), sum of years digits (SOYD), accelerated cost recovery system (ACRS) or some other depreciation method, depreciating a company's assets can make a big difference each year at tax time. This can be done easily with one of the asset depreciation software programs that are available.

I recommend: Accounting Software 411 has a list of software that will enable you to depreciate the assets of a company. SoftScout also has a list of asset accounting and asset management software. Analyzing assets for your company and calculating their depreciation for taxes is only a click away. AccountingCoach is an online resource that provides free training in all facets of accounting.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Unlike contingent losses and liabilities, contingent assets (i.e. possible future assets that depend on a contingent gain) are not to be recorded in accounts, even if the gain is likely and estimable. An example might be if there is a pending lawsuit that your company is likely to win and be awarded cash.

If you own fixed assets, asset analysis is necessary in determining your depreciation and amortization for tax purposes. Laws about depreciation are constantly changing, making asset analysis and reporting that much more complex. You especially need to stay in compliance with Sarbanes-Oxley, which requires public companies to provide accurate reporting and maintain tight internal controls. Confusion can lead to misclassifications and misstatements, which can be very costly to your company. Therefore, you want to simplify the process yet maintain the versatility and capability of a good analysis system.

If you are a small to midsized business, you might consider retaining an expert proficient in fixed asset analysis services. Another option is obtaining comprehensive fixed asset depreciation software along with the requisite training. In either case, educate yourself with asset analysis information that explains the variables of asset accounting. Do the following to get good asset analysis in accounting:

1. Retain accountancy services that provide proficient asset analysis.

2. Obtain a comprehensive accounting asset management software.

3. Educate yourself about accounting asset analysis to supplement any service or software.

Action Steps
The best contacts and resources to help you get it done

Find experts in asset analysis in accounting to keep you in compliance

Search for experts in asset accounting who can help you accurately assess your fixed asset inventory, provide efficient management solutions and help you stay in compliance with current tax laws, including Sarbanes-Oxley.

I recommend: Asset Management Resources provides fixed asset inventory and reconciliation consulting services that ensure reporting accuracy and compliance, expert classification and data fortification. American Appraisal has specialists who provide fixed assets management services, including cost segregation, reconciliation and insurance valuation.

Obtain proficient software for your accounting asset analysis

You can find many fixed asset software solutions to simplify your asset accounting. Search for a solution that provides a comprehensive menu of asset analysis across your various business segments. Some solutions provide visual tracking assessments as well. In the end, find software that streamlines your process yet optimizes your productivity.

I recommend: IBM Asset Management Solutions views asset types from across your enterprise, including production, facilities, transportation and IT. It provides modules that improve the returns on your assets, decrease costs, facilitate regulatory compliance and improve asset-related decision making. NetSimplicity's Visual Asset Manager software allows you to track your assets, map assets to floor plans, scan and print bar codes and audit your Windows workstations.

Educate yourself and your staff about fixed asset analysis to supplement your analysis solutions

Gain knowledge of fixed asset management through courses or tutorials. Some training courses provide certification as well.

I recommend: FixedAssetInfo.com provides online classes on the basics and methods of depreciation. Michael Management Corporation offers an online course on asset accounting basics that includes training slides and a comprehensive lesson guide.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Use online depreciation calculators that allow you to plug in information by property type, service date and original cost to get a depreciation schedule.

Asset accounting is a important for individuals or small business that own fixed assets. Accounting assets will need to be analyzed mainly for tax purposes, but it can also provide you with valuable information you can use to run your company. You will learn the correct classification of your assets and their depreciation rate. This will help you accurately report your assets and their worth to the IRS.

Accounting asset analysis requires basic accounting skills, plus training to help you take stock of the type of assets your company holds. An asset analysis team can get asset analysis in accounting education and training through:

1. Classes that teach fixed asset analysis and variable asset analysis.

2. Online courses that provide comprehensive analysis training.

3. A bachelor's or associate's degree in accounting.

Action Steps
The best contacts and resources to help you get it done

Earn a degree in accounting to learn the basics of accounting asset management

Accounting asset management not only requires specific training for assets, it also requires that you be able to perform basic accounting tasks. This is why a bachelor's or associate's degree in accounting is the first step to learning how asset analysis works.

I recommend: The University of Northern Iowa offers a comprehensive bachelor's program in accounting that qualifies you for many different job opportunities, including asset analysis. Bryant & Stratton College offers an associate's degree in accounting. You will receive much of the same information in less time than it would take to earn a bachelor's degree.

Learn about analyzing assets through online courses

Online courses are the quick and simple way to learn about asset analysis. If you already have a team of qualified accountants, this is a cost-effective way to turn some of your accounting team into an asset analysis team. Most courses are self-guided and may offer certification upon completion.

I recommend: Training-Classes.com provides an online course that teaches asset accounting, including how to track assets and report assets for tax purposes. ELearners.com provides a list of online courses that teach the fundamentals of asset analysis.

Provide on-site or classroom training to teach employees about assets in accounting

While online courses may be convenient, on-site training or classroom training can offer more information, better skill assessments, and more hands-on training for implementing programs used in your company's asset analysis.

I recommend: The University of Washington offers accounting courses that cover asset analysis and practical information on how it can be used to manage a company. The University of California - Davis offers many courses that provide accountants with training in asset analysis, including asset management systems and account manager training.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  You may need additional training for your asset analysis team, especially if your business plans to use any type of fixed asset depreciation software.

Conducting business requires a certain amount of capital investment in tangible assets such as equipment, materials and facilities. The management and accounting of those fixed assets is important to keeping your books in order. Those fixed assets are separated into short- or long-term assets and certain issues need to be taken into account such as depreciation and costs to prepare an asset for use. To cover all of your bases, learn these key terms relating to asset analysis in accounting.

Action Steps
The best contacts and resources to help you get it done

Fixed assets

A fixed asset is one that is mostly tangible. The asset won't be converted to cash in the current or next fiscal year. Examples of fixed assets include office furniture, real estate, and equipment.

I recommend: Check out this example of long-term capital asset recognition from the National Association of College and University Business Officers.

Depreciation

When an asset loses its value over time, it depreciates. Asset accounting takes depreciation into account when pro-rating an asset over the period of time it is useful.

I recommend: Review this example of depreciation and straight-line depreciation from BusinessTown.

Sinking fund

A sinking fund is when an annuity is set up with the depreciation expense of a fixed asset. The end goal is to have the annuity's amount at the end of its term equal the acquisition cost of the fixed asset.

I recommend: Get a real-life example of a sinking fund by using this calculator from the EPC Server.com.

Amortization

Amortization is the method used to recover the costs associated with depreciation. In asset accounting, amortization is used to write off the asset over time, usually the life of the asset.

I recommend: Learning Link Finders provides an additional definition and example.

Sarbanes-Oxley Act

A 2002 U.S. federal law, the Sarbanes-Oxley Act, established rules, regulations, and standards. These standards are for public companies' accounting firms and include 11 reporting requirements. The law also set up an accounting oversight board to oversee audits.

I recommend: The American Institute of Certified Public Accountants provides additional resources, including searchable text of the Sarbanes-Oxley requirements.

Cost segregation

Cost segregation refers to separating costs into specific accounting categories. This allows for higher depreciation on a subset of your assets, including those deemed to be personal property. The overall effect is a reduction in taxes.

I recommend: Find out more about cost segregation services through Real Asset Management.