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Fixed asset management has developed into a complex issue for many companies. Most corporations are burdened not only with management needs but with maintaining at least five separate sets of depreciation books-book (GAAP),federal, alternative minimum tax (AMT), state, and the new adjusted current earnings (ACE) for all corporations except S corporations.
As a result of this growing complexity, fixed asset managers are eager to computerize their record-keeping and reporting requirements. While spreadsheet templates are an improvement over manual records because they allow global changes and reduce the risk of calculation errors, additional depreciation requirements (such as ACE) now make the use of spreadsheets more cumbersome. Spreadsheets also lack sophisticated reporting and sorting abilities.
As I wrote in my article, "Improve Your Bottom Line: Fixed Asset Management," published in the September 1991 issue of MANAGEMENT ACCOUNTING(R), the ultimate solution is to invest in comprehensive fixed asset management software to develop streamlined asset information reporting. A comprehensive system should be able to handle pertinent management information as well as all required depreciation calculations.
I received numerous calls in response to my article. Based on these conversations, I have put together the following list of questions fixed asset managers should ask during the implementation of a computerized fixed as set management system.
Q. Do you have fixed asset manager? If not, who will be responsible for maintaining the fixed asset database?
Before you begin implementation procedures, designate a new fixed asset manager unless you currently have one. He or she will be the key person during the implementation and ongoing fixed asset management procedures.
Q. How are your fixed assets currently managed?
Reviewing your current procedures will give you a starting point on evaluating your current records to determine areas of change and/or improvement that you will implement in your new system.
Q. What historical fixed asset records are available?
These records represent the initial input for the computerized system. Your current records should be reviewed for accuracy. Creating a new database from inaccurate records will only generate a useless fixed asset management system. Taking a physical inventory of assets is beneficial in determining the accuracy of your manual records. If you have multiple locations, it is important to note each asset's location because a computerized system will...