Accounting of fixed assets

Any production activity involves the use of fixed assets. A distinctive feature of them is the repeated use in production activities. In doing so, they partially give their value (depreciation) to the cost of production. As a result of use, fixed assets do not change their form. They must be in circulation for at least 12 months.

Proper accounting of fixed assets is necessary at any enterprise, regardless of its specialization and the nature of production. On this depends the correctness of the entire accounting reporting and accrual of depreciation in the cost of production. All these indicators affect the final financial result.

The fixed assets are classified according to several criteria.

There are several groups depending on their type: buildings, structures, any vehicles, equipment and machinery, working or productive livestock, production equipment, perennial plantations and some others.

Depending on their belonging to the industry, they distinguish between industrial means, fixed assets of trade, agriculture, and others.

Accounting for fixed assets is also conducted by their participation in the production process. That is, they can be in reserve, in operation, in the stage of reconstruction or completion, for conservation, etc.

They are also subdivided depending on the property rights that an enterprise has on them. That is, they can be owned and leased.

Also, fixed assets are divided into production and non-production.

Accounting for fixed assets is based on their correct assessment. This is a monetary expression through which they are reflected in the balance sheet.

There are three options for assessing funds related to the main ones.

The initial value arises at a time when the principal proceeds to the balance of the enterprise. It can be changed only in case of reconstruction, liquidation or completion.

Recovery cost is the total amount of costs for the purchase or construction of fixed assets, for their transportation and commissioning.

The residual value consists of the amount of the initial cost less the amount of depreciation charges accrued for the period of operation.

To make the actual availability of funds related to the basic, compare with the documentary, conduct an inventory. To do this, a commission is created that checks their availability, technical condition and use in the production process. Accounting for fixed assets is mandatory for all organizations. To do this, the relevant regulatory documents, acts and balance sheet accounts are used.

Accounting for fixed assets in the bank is conducted on the same principles. Each credit institution must accumulate funds to purchase or restore assets that define as fixed assets. This is due to depreciation.

When taking on the balance sheet, moving or other transactions, the fixed assets are also recorded. Postings are reflected in the balance sheet on the accounts that are intended for this purpose. So, after commissioning, their cost is withdrawn from the loan account 08, which takes into account non-current assets, and credited to debit account 01, designed to account for fixed assets.

The movement of these funds also reflects in the primary documents. These include the act of receiving and transferring fixed assets or a group of fixed assets, an act on the write-off of objects, an invoice for internal movement, inventory cards, etc.

Upon receipt of fixed assets, an acceptance certificate is drawn up , stating its main characteristics, the year of commissioning, the year of construction, etc.