Are You Tracking Your Fixed Assets?
Raymond E. Lofstrom
9 October 2017
Are you monitoring what you spend on capital improvements at your dealership? How often do you look
at the bottom left-hand side of your balance sheet?
Beyond the cash flow impact to your operations,
monitoring your fixed assets can provide several other
The first step in monitoring your fixed assets is to identify what your fixed assets actually are. A fixed asset is generally an item purchased for long-term use and is not likely converted quickly to cash. Examples are land, buildings, furniture, fixtures, computers, and equipment. Each time a fixed asset is purchased, a copy of the invoice should be maintained to support the addition. The next step is to come up with a capitalization policy. This policy will define a certain threshold dollar amount above which assets will be capitalized and below which items will be expensed. You should consult with your tax advisor on the threshold amount. The third step is to maintain a schedule that includes the date of purchase, vendor, cost and what type of fixed asset it is – Furniture & Fixtures, Equipment, Computers & Software, Leasehold Improvements, etc. This schedule should agree with the amount you are carrying in each fixed-asset account.
The process of tracking your fixed assets can provide
Carrying fixed assets that have been disposed of:
If you already have a list of fixed assets, a review of the list will usually uncover unrecorded retirements in an organization such as items that have been disposed of or are no longer at the dealership. Correcting this discrepancy can result in an immediate write-off of any remaining depreciated value reducing income taxes, property taxes, and insurance premiums.Reduce property taxes:
Reduce property taxes:
An accurate listing of fixed assets owned will ensure that you only pay personal property taxes on assets that are in service and owned by the dealership.
Accurate insurance premiums:
An accurate listing of fixed assets will ensure that you have adequate insurance for assets that you have in the dealership and that you are not over- or under insuring.Insurance claims:
Should the need arise to file a claim, an accurate fixed- asset listing will provide support for the claim. Tax benefits:
When you track fixed assets, you will ensure that you are claiming the most depreciation allowable.
If fixed assets are tracked, you will be able to take a periodic physical inventory of fixed assets to determine if any assets are being misappropriated.
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