Fixed Assets Inventory: What is it?
What are fixed assets?
Fixed assets are the assets of a company, whether intangible or tangible that cannot be converted into liquid in the short term and that are usually necessary for the company to function and are not intended for sale.
Fixed assets are also classified into three groups:
- Tangible, items that can be touched, such as land, buildings, machinery, etc.
- Intangible, which includes things that cannot be materially touched, such as patent rights, etc.
- Companies Investments.
What is a fixed asset inventory?
The Survey and inventory of Fixed Assets is the process of quantifying the fixed assets or non-current assets of a company and their general and/or specific characteristics., the company's offices, computer equipment, transportation equipment, laboratory equipment and everything that remains inside or outside the facilities can be taken as an example of fixed assets.
An inventory will be of much higher quality if it is carried out according to the criteria of the “Minimum Indivisible Unit”, which is understood as “that unit of machinery made up of the equipment itself, driven by a certain mechanism or transmission, followed, in its case, minor equipment or installations, as well as their engineering, directly related to this equipment, such as: civil, mechanical, electrical engineering installations, pumps, valves, pipes, instruments, etc., and which therefore define a productive capacity, those spare parts or parts not installed should not be included, when they are part of the spare parts warehouse or have already been charged to results.” Bulletin 11-18 CNBV
What is fixed asset inventory used for?
A Fixed Assets Inventory allows us to control and measure assets in an efficient way, it is compared with the accounting records and the company's patrimony is verified for a correct validation for many purposes:
|Administrative Purposes||Financial purposes|
|Administrative or Correct Identification of Assets||Insurance Appraisal|
|Fixed Assets Control||Fixed Asset Valuation|
|Valuation by C – 6 and C – 15|
As well as increasing the return on the investment made in the assets and avoiding unnecessary expenses. By knowing specifically the status of each asset, a company can determine the right time to invest in new assets.
The correct inventory collection of fixed assets, It helps to have a backup of the current state of the company, which is also very useful in situations of merger, division, contracting insurance that covers all assets, obtaining bank loans, covering bidding requirements or creating optimization plans and management.
What kind of fixed assets can be controlled?
The assets can vary widely depending on the specific characteristics of each company:
- Lands: All land owned by the company
- In progress constructions.
- Own buildings: All types of properties owned by the company, such as buildings, premises, flats, etc.
- Facilities and improvements to leased properties.
- Machinery and equipment: All machinery, industrial vehicles, and tools necessary for the daily operation of the company.
- Operations team.
- Furniture and fixtures.
- Computer equipment.
- Transportation equipment: All means of transportation owned by the company that are used for people or livestock.
- Controllable equipment.
- Leased equipment.
What information is captured in the fixed asset inventory?
The purpose of a fixed asset inventory is to collect the following information:
- Descriptive name and specific characteristics
- Cost center
- Number of assets
- Previous identification number (if available)
- State of preservation (good, fair and/or poor)
- Serial number
Fixed Asset Inventory Types
Some types of fixed asset inventory are:
- Inventory without identification (each property or asset is identified with the following data: name, brand, among others, and is arranged according to the company's internal processes or in a database).
- Previously identified inventory.
- Inventory management
- Technical identification (brand, series if applicable, description, etc.)
- Physical location of the asset within the real estate or property.
- State of conservation.
- Photographic report of each element
- Labeling of each item placed in the inventory of a database with a conventional label or tag
Suitable targets for a fixed asset inventory
The companies that can be targeted are:
- Hotel chains
- investment funds
Why is it important to keep the fixed asset inventory up to date?
If you already have a Fixed Assets inventory, periodically updates are vital. To preserve awareness and promote the organization within the company of all assets within it. By doing this, a company can take care of the devaluation of assets and their location.
Regular inventory control can help make good decisions within the company, reduce expenses if necessary, and prevent losses. That is why it is important to develop an efficient, accurate and reliable inventory survey of fixed assets.
Availability and service level decreases.
- Poor asset replenishment.
- Availability and level of service decreases.
- Erroneous visibility between the company's production and asset purchases.
- Shortage or lack of certain assets.
These produces risks for the company's management and lead to poor decision making.
Key questions to know the need for an inventory:
|Do you know where your company's fixed assets are located?||Do you know when to provide maintenance?|
|Do you know their actual status?||Can you control the inflows and outflows of fixed assets?|
|Do you know the person responsible of these tasks?||Do you keep your asset database up to date?|
If you cannot answer these questions accurately, contact us. Remember that you have no control over what you are not aware of. Take control today.