You are the head accountant at a Company. One of your main duties is verifying t

Question

You are the head accountant at a Company. One of your main duties is verifying the existence of the fixed asset accounts. There has been increased employee turnover in several departments which are the custodians of these fixed assets. Due to this, you are especially concerned about the acquisitions and dispositions of all fixed asset transactions.

Based on these factors, how would you go about ensuring the existence of all fixed assets, and that they are accounted for properly on the books of the company? Explain your reasoning using at least one example.

Explanation / Answer

To ensure that the fixed assets exists at the position reflected in the books of account,the company need to conduct the physical verification of such fixed assets.

Also a fixed asset register should be maintained to trace the acquisitions and disposals of the fixed assets.

It is also necessary that revaluation of fixed assets to be done if the need be; in case of any conditions indicating the differences in value of fixed assets in the books and its actual valuation. Also known as impairment of assets.

The depreciation should be accounted properly in books as per the regular accounting policies followed by the company.

The accounting of fixed assets to be done in accordance with the accounting standards.

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