What is fixed assets depreciation, anyway? The Internal Revenue Service (IRS) defines fixed assets depreciation as “the systematic and rational allocation of the acquisition cost of an asset, less its estimated salvage value or residual value, over the assets estimated useful life.” In plain English, fixed assets depreciation is the process by which a business may expense on an annual basis a portion of an asset’s cost. Investopedia.com explains: “The asset’s value decreases along with its depreciation amount on the company’s balance sheet. The corporation can then match the asset’s cost with its long-term value.”
There are a few factors that companies have to consider when they’re calculating fixed assets depreciation. First, the useful life, or period of time during which the company plans to use the asset and record its depreciation. When that period ends, the company typically disposes of the asset. Second, the asset’s salvage value. When a company decides to dispose of an asset, sometimes it can sell it for a reduced amount. Depreciation is calculated based on the asset’s original cost minus its estimated salvage value. Third, a company must determine its preferred method of fixed assets depreciation. Some organizations choose to use an accelerated method, while others space it out over the useful life of the asset. The advantage of using the accelerated method is that you’re able to record more depreciation earlier for an asset. That, in turn, defers tax liability. Straight-line depreciation, on the other hand, is easier and more commonly chosen, because you’re reducing the asset’s value on a consistent basis throughout its useful life.
Companies are busier than ever these days, though, so whether it’s fixed assets depreciation or some other aspect of asset tracking, employees simply don’t have time to manage all of the details without making costly mistakes. Relying on Excel spreadsheets is the recipe for certain error. Gaps in recordkeeping, the occasional typo or duplication of work can result in frustration and wasted time. An easy-to-use, yet powerful system that automatically tracks depreciation and other data is your best bet for accuracy, accountability and a longer lifespan for your fixed assets.
When you begin to consider the best solution for your organization, keep in mind that you want all of your stakeholders to use it. Everyone should be included in the conversation. That’s why you should be on the lookout for a highly intuitive, user-friendly asset tracking solution. Further, you’ll want a system that allows you to add as many users as you want without charging you if you exceed a particular number of users. Additionally, if you want everyone to get on board, you’ll need a solution that allows mobile access. A significant part of business takes place on mobile devices, and a 9-to-5 workday is a relic of past – particularly as the world becomes ever more connected. We need access to our data 24 hours a day. A mobile platform that syncs with the cloud ensures that you not only have that access, but that your data is in real time, as well.
Given the speed at which technology continues to evolve, you’ll also want to employ a system flexible enough to adapt as your needs change and new technology becomes available. No two companies have the same needs, so steer clear of asset management products that don’t allow you to customize how your data is organized and displayed. You’ll want access not only to your asset depreciation figures, but also their exact location, complete maintenance history, insurance and warranty information, check-in/check-out status, lease/purchase information, work order status, and more.
Let Asset Panda show you how easy it is to manage the entire lifecycle of your vital fixed assets entirely from the palm of your hand, using the smartphones and tablets you and your employees already carry. To learn more, or to begin your free 14-day trial, go to assetpanda.com