A significant number of mid-size or smaller businesses still rely on spreadsheets to document their assets. But the more your enterprise grows, the more physical items you need to keep track of. The solution? An asset register service, like ours at Asset.Guru.
An asset register is a complete listing of a business’ or an entity’s physical resources. Organizations, schools, or companies use this listing to track the date assets were purchased, calculate their value, and identify their physical locations.
With an asset register, accountants have an accessible reference when comparing the value of the assets against their ledgers or balance sheets. They can also optionally use this list to calculate depreciation as part of a depreciation schedule. As such, this is a vital decision-making tool that businesses can use for asset verification.
Although asset registers involve tracking items, they are not the same as inventory management tools. Inventory management involves keeping a log of what you sell or consume.
At Asset.Guru, we can help manage your assets and keep track of what you own.
Why Create and Maintain an Asset Register?
Large companies might have entire teams of auditors and bookkeepers to manage their assets, but what about smaller businesses?
Small and medium enterprises tend to keep track of their assets independently. They may rely on Microsoft Excel spreadsheets to keep track of their office equipment and other properties.
This method might have worked before fixed asset management software even existed. But without pre-made asset management templates, they have to create records from scratch.
The Excel method might work in the beginning when you only have a handful of essential equipment to run your business. But if you want to grow your business, expect to add more computers, communications equipment, and vehicles to your assets.
As your business grows, the audit trail follows, resulting in more complicated auditing tasks. Save yourself from all the hassle with the automated calculation services of Asset.Guru. We cater best to the middle market or fast-growing small businesses.
Every small business owner needs a good asset management system to keep track of their physical assets. With all the asset information stored in one convenient place, businesses can keep tabs on their properties’ values.
The Different Types of Asset Registers
Asset registers are management solution tools for keeping track of the number of assets a business has. Every company has its own capitalization policy that dictates which assets should be included in an asset register.
The capitalization policy is a company’s threshold for identifying the assets it should keep track of.
Suppose a company’s capitalization policy starts at $300. The company will then include all of its specific assets, like computers, that cost $300 and more in its asset register.
Small businesses might have single asset registers only for their most essential assets. Larger companies may have different asset registers for a more organized listing of their properties by asset type.
Asset.Guru details the various kinds of asset registers, including:
Fixed Asset Register
A fixed asset is a tangible asset that a business owns and uses to produce its goods and services. Such assets’ useful life is more than a year, making them noncurrent assets or long-term investments.
Examples include property, plant, and equipment (PP&E), which comprise company vehicles, land, buildings, and office furniture.
As opposed to tangible assets, intangible assets, which are not physical objects, include copyrights, patents, trademarks, and other intellectual property.
A fixed assets register includes the following information in its format:
- Description of the asset: A general overview of the asset briefly explaining what it is. Some companies assign codenames for their items, so having brief summaries makes identification easier.
- Date of purchase: The date when the asset officially became company property. The date of the asset’s creation might be another value.
- Purchase cost: How much the company spent on buying the asset. For auditing purposes, this value may include all related receipts during the purchase of the item.
- Location of the asset: A description of the asset’s location on the company premises. For example, in a school setting, the site of an LCD projector is likely in the audiovisual room.
- Owner of the asset: The asset owner may be an individual, a group of individuals, or even another entity, as long as the object is under that person’s or entity’s name.
- The asset user: An individual or a group of individuals with permission to utilize the asset to carry out their corresponding responsibilities.
- Barcode or the serial number of the asset: The machine-readable parallel bars or characters and numerals for quick identification of an asset. Businesses assign unique barcode numbers to their assets and use scanners to easily find related information about the asset.
- Insurance coverage: The insurance policy of an asset of any kind. Companies might get their buildings property insurance, such as fire insurance, flood insurance, or earthquake insurance to protect these assets from potential damages.
- The current value of the asset: The amount that the asset’s owner could earn should they dispose of the asset as of the current date.
- The depreciation method used: The type of depreciation used to calculate the company’s losses upon the asset’s purchase.
- The manufacturer’s warranty information: This contains the asset’s original manufacturer’s details that guarantee the asset’s condition upon purchase. Information may include how long the asset is eligible for return or exchange.
- Maintenance information: This may detail the instructions on repairing the asset or a history of its repairs or replacements. It may also include the list of individuals who conducted repairs on the assets and the receipts for these professionals’ services.
- The remaining life of an asset: How much longer the company expects an asset to continue earning. Naturally, this value changes over time.
- The salvage value or the estimated resale value of the asset: An asset’s book value once depreciation is entirely expensed.
IT Asset Register
A large company with an IT department may have a separate asset register to keep track of all its equipment. An IT asset register is a dedicated tracker to report PCs and other IT hardware or software locations.
IT asset registers might include the following information:
Asset type: From an IT perspective, assets are classified as hardware or software assets.
Hardware includes machinery, tools, equipment, and other physical items, such as PCs, printers, and related devices. Meanwhile, software consists of the programs that a computer contains.
Location of the asset: Assets can be located on-premise or in a cloud. IT assets found on-premise include hardware assets, while services, such as ours at Asset.Guru, rely on cloud servers to track software assets.
Cloud servers can be private, public, or hybrid. A public cloud computes a shared internet connection, while a private cloud server is dedicated to a single organization. Hybrid cloud computing uses a combination of private and public cloud servers.
Operating system: The software that a computer uses to run programs to perform its essential functions. Standard operating systems include Microsoft Windows, Mac OS, and Linux.
License renewal date: The date when an official license needs to be renewed to continue using the program. Operating systems or programs offer licenses to activate premium services that are not usually available in free versions.
License start date: The date when a license is effective and grants users access rights.
User: The individual or the group of individuals assigned to use the asset.
Cyber insurance coverage: Details that cover the asset’s protection from a potential data breach. Assets that hold sensitive information, including account numbers, credit card numbers, Social Security numbers, or any identification details, usually have cyber insurance.
The depreciation method used: Mostly applicable to hardware. This details the process used to calculate the decrease in an asset’s value over time.
Digital Asset Register
A company may have assets that they store digitally, including image files, audio files, video files, design files, and other documents.
Keeping a digital asset register is where the cloud-computing services of Asset.Guru come in handy. Our asset management system empowers you to track your digital assets without the hassle of browsing through several digital locations.
A digital asset register typically includes the following essential components:
Description of the asset: A brief account of the asset to quickly identify what it is.
Location of the asset: Details on the digital files’ directories within their properties. The digital asset register gathers this location information for the auditor to confirm if the asset still exists in its declared location.
Asset owned or copyrighted: Digital assets may be original or copyrighted material. Assets should be labeled accordingly to avoid any legal issues when using copyrighted material.
Asset user: The person or group of people with access to the digital asset, whether for viewing or editing.
Digital insurance cover: With a business model relying on technology, this policy covers the digital assets’ protection.
Asset format: The specific form of the digital asset, which may come in PNG, JPG, or TIFF file formats.
Preservation risk: This detail identifies what the digital asset potentially faces in terms of risks. Digital assets are exposed to technological, organizational, and cultural risks.
Technological risks include the asset’s failure to perform or broken files. Organizational hazards include potential losses. Meanwhile, cultural risks include obsolescence due to technology changes, which affect the life of the asset.
Type of digital asset: Whether the digital asset is audio, visual, or graphic in nature.
The estimated value of the digital assets: Digital assets that are usable outside the company’s context carry a monetary value. The company decides how to put a number value on its digital assets.
The depreciation method used: The technique used to identify asset value as time goes by.
Why is the Depreciation Method Important?
When managing your assets, recording their depreciation is a strategy for calculating and determining their decreased value over time.
As you will notice in the next sections, calculating depreciation rates involves complicated formulae. To an extent, accounting services, such as Xero and NetSuite, help businesses in this manner.
If you use such services, you can easily integrate them into Asset.Guru to utilize our automated depreciation calculators and reporting options for an enhanced asset tracking experience.
Depreciation values vary depending on the asset type. Tax authorities often impose such methods on assets.
We, at Asset.Guru, can give you a primer on the four methods that analyze an asset’s depreciation value:
Straight-Line Depreciation Method
This type of depreciation method is the most straightforward and commonly used approach in the US.
With straight-line depreciation, an entity charges an equal amount of the asset’s cost against each accounting period using the following formula:
x = the asset’s historical cost
y = the asset’s estimated salvage value
z = the asset’s useful life
An asset’s salvage value or residual value is its estimated cost at the end of its useful life. The life of the asset is simply the period that it is economically valuable for a business.
Units of Production Depreciation Method
This method assigns an equal expense value to each unit or service that an asset produces. This technique usually applies to assets in a company’s production line.
Calculating the depreciation expense using this method involves two steps:
1. Determine the depreciation per unit:
x = the asset’s historical cost
y = the asset’s estimated salvage value
z = the estimated total production units during the asset’s useful life
2. Determine the accounting period’s expense:
n = depreciation per unit
m = the number of units produced within the period
This calculation appears on the income statement and the asset’s accumulated depreciation on its balance sheet.
Double-Declining Balance Depreciation Method
This method is an accelerated depreciation method that incorporates the straight-line depreciation method in calculating the depreciation rate.
The double-declining balance method calculates a higher depreciation charge within an asset’s first year and then gradually decreases depreciation expense in subsequent years.
Sum-of-Years-Digits Depreciation Method
This method is less accelerated than the double-declining balance method. Still, it results in a more accelerated write-off than the straight-line method.
The sum-of-years-digits depreciation method determines annual depreciation by multiplying the depreciable cost by fractions based on the sum of the digits of an asset’s useful life:
Where: n = asset’s useful life
The Importance of Asset Audit
Asset auditing entails cross-checking an entity’s declared assets to confirm the existence of these objects. While accounting software tracks the pertinent details of a company’s assets, the asset audit involves actual ocular inspection of the assets listed.
To a great degree, digital systems can save a lot of work when tracking assets, especially when assessing intangible values, like an asset’s life cycle. Still, the physical audit reaffirms the credibility of your asset register.
Asset audit is also a strategy in asset management that impacts an organization’s income. You may find unrecorded damages to an asset when physically inspecting them, affecting the asset’s value.
Asset.Guru offers barcode services to help you perform asset audits much easier. With custom tags attached to your assets, simply scanning an item can confirm its presence.
Challenges of Keeping an Asset Register Accurate
In managing your assets, cloud-computing software, such as NetSuite and SAP, may present more modern alternatives to basic spreadsheets. Still, keeping an asset register accurate may be difficult without an asset management software, like Asset.Guru.
NetSuite and SAP services are designed to manage dynamic asset information and calculate necessary valuations throughout an asset’s lifecycle. If you use any of these services, you can easily leverage Asset.Guru.
Dynamic information includes asset value, asset data, asset status, and asset types. Recording such data in an extensive asset list can be challenging when using spreadsheets, which are not necessarily designed to keep track of ever-changing information.
With the cloud-based software of Asset.Guru, multiple groups in a company can update asset information and financial information whenever necessary. Plus, they can do so without having to open the single asset register spreadsheet file.
Maintaining an Asset Register
With all the necessary information attached to your every asset, you have to keep your asset register updated. Use Asset.Guru’s barcoding system to make tracking your items easier.
With a complete asset list at your disposal, you can perform a physical audit to confirm that all assets are in place. Similar to checking a grocery store’s inventory, scanning your assets’ RFID labels or barcodes is an easier way to do physical auditing.
You can compare the findings of your physical inspection against the list of items in your asset register and take the necessary actions should there be discrepancies.
The Solution for Asset Tracking and Asset Depreciation
The cloud-based asset management features of Asset.Guru offer a couple of advantages over standard spreadsheets.
Manage your assets: Solutions, like Asset.Guru, gather all your asset data in a centralized location to save you from having to search several locations for the data you need.
Warranty and other reminders: With all the necessary information in one place, you can focus on taking care of your assets’ warranty and depreciation status to save on time and money.
Divisions and departments: Premium services support complex businesses with divisional reporting so that more people can access the information and edit in real-time, whenever necessary.
Maintenance: As a convenient mobile add-on, the Asset.Guru Maintenance Module helps you identify which of your assets need repair.
Document and history: You can match your assets with invoices, certificates, and how-to guides to keep them in one convenient place.
Reporting and audit trails: Asset.Guru comes with built-in reporting and audit trails to support compliance and audit readiness.
Depreciation and finance: Accountants and bookkeeping professionals can integrate Asset.Guru’s automated calculation and reporting services with other cloud-computing software, like Xero, NetSuite, and QuickBooks Online.
Check-in and check-out: You can assign tools and equipment to your staff and easily track who is currently using an asset.
Asset management isn’t a tough job when cloud-computing software, like Asset.Guru, empower businesses to manage their financial resources.
We know how standard cloud-computing services can be costly and complicated. Hence, we’re inviting new users to book a demo with us to learn how our services work.
Discover how our asset tracking services can be an asset to your company. Register for a free Asset.Guru account today!