- Assets that can generate income in the future are called fixed assets. Fixed assets are those that last longer than one year.
- Goods of immovable nature are fixed assets. Therefore, capital expenditure of long-term nature is called fixed assets.
Types of fixed assets
Fixed assets are classified into two types, namely tangible and intangible. Visible as touching land building plant
If the assets are tangible fixed assets, then the invisible assets that are invisible and tangible and make a positive contribution to the income are called intangible fixed assets. Such as goodwill, Copywrite, etc.
Income Tax N 2058 classifies assets for tax purposes in five ways.
|A||Structures of a permanent nature||5%|
|B||Office operating equipment||25%|
The need/importance of fixed assets
Just as the human body has a great need for the skeletal system, so does the need for fixed assets in the organization. In this context, the need for fixed assets is mentioned below.
- To run the daily work of the organization smoothly
- To prepare the basis for creating revenue for the future
- To attract office decoration
- To increase the prestige of the office in the eyes of the service recipients
- To face the kind of physical obstacles that may come in the future
- Take advantage of opportunities that may appear in the future when property prices fluctuate.
Thus, fixed assets are a must for any office. This not only adds beauty to the organization but also helps to strengthen the financial position of the organization through value addition when needed.
Physical examination of fixed assets
Each office periodically observes long-term physical goods through an employee or committee to find out the condition of the fixed assets. This is called the physical examination of fixed assets. Physical testing of fixed assets is done through modern tracing. The financial administration regulations of the organization make the physical examination mandatory. This usually happens before the end of the financial year. Linguistic testing is needed to increase the utilization of goods, prevent leakage, plan purchases, determine needs, and stockpile a lot of goods, and get rid of shortages.
There is also legal recognition as the documents of physical audit have to be submitted during the audit. The physical test is done by providing numbers according to a similar group of the organization. Physical testing is done to decide whether to make the same, to the auction or to use.
Thus, physical testing is required to prevent the property from being underused, misused, and misused.
Fixed asset management
- The process of achieving the pre-determined goals of the organization through cost reduction by purchasing assets of long-term nature at the right time and sending them to the right place is called fixed asset management. Which puts the ideal use of the property at the center.
- Asset management work ranges from pre-purchase to post-purchase. The following procedures can be followed to make asset management effective.
- Purchase of fixed assets only by preparing a purchase master plan
- To get the goods purchased as per the specification and file in the store
- To distribute property based on demand and need
- Regular maintenance through physical testing, auctioning off useless ones.
- To conduct an audit by preparing report keeping records of assets as per the prevailing method
- To prepare plans from the background of current property management
Thus, property management is a regular process, not a chore. From which, by making the best use of fixed assets, one can get rid of the situation of equal loss or increase. At the same time, the institutional income can pick up the pace.