1. 08th March, 2014

2. FIXED ASSET REGISTER
By Venkanna Setty08th March, 2014

3. Going towards to Know……….
 Definition of Fixed Asset
 Requirement for maintaining Fixed Asset Records ??
 What is Fixed Asset Register ??
 Is FAR mandatory ??
 Why should Fixed Assets Register (FAR) required ??
 What includes in FAR ??
 What are standard fixed asset control procedures ??
 What is the Fixed Assets Issue Register (FAIR) ??
 What is Physical Verification of Assets ??

4. Definition of Fixed Asset…
 Fixed Asset: It is an asset, with a useful life of over one year, owned & used by a
Enterprises to achieve its stated objectives
 As per AS 10 : Fixed asset is an asset held with the intention of being used for the
purpose of producing or providing goods or services and is not held for sale in the
normal course of business
 Examples..
 Buildings
 Machinery
 Vehicles and etc..

5. Requirement for Maintaining Fixed Asset Records ??
 A Fixed asset record is a mandatory under section 209(1)(c) of the Companies Act. 1956.
Company requires to maintain various books of records it includes details relating to all its
assets that form a part of its total fixed assets records. Any failure to maintain this records as
required by the statute may entail penalty, which may extend to imprisonment in some cases
and
 Enterprises need to follow the AS-10 Accounting for Fixed Assets & AS-6 Depreciation
Accounting
 Enterprises can also maintain Fixed Asset Register but it is mandatory in some cases.

6. What is Fixed Asset Register ??
 It is a Register used to keep track of the fixed assets of a Enterprises. The register shows
the value of assets, date of acquisition and other details necessary to compute for
depreciation and tax purposes. Fixed assets include land, buildings, machineries and other
items used in the business and are not for sale in the ordinary course of operations.
 It is a manual or computerized record of fixed assets
 It also contains details of assets – Model, quantity, rate, value, supplier, receipts, issues,
balance, location etc. It also has the date of receipt of the asset & the payment voucher
reference
 Each class of assets will have a separate page in the FAR

7. Any Questions08th March, 2014

8. Is FAR Mandatory ??
 A fixed asset Records is a Mandatory under section 209(1)(c) of the Companies Act. 1956.
This register requires a company to maintain various details relating to all its assets that form
a part of its total fixed asset block.
 As per CARO(Company’s Audit Report Order – 2003) requirement its compulsory so if
CARO is not applicable on your business then its not mandatory. And in Income tax act there
is no specific provision to maintain fixed asset register.
 So Fixed Asset Register is not mandatory as per companies Act
CARO

9. Why should Fixed Assets Register (FAR) Required?
 CARO 2003 Reporting (if CARO Applicable)
 Fixed Assets have a life of more than 12 months & hence are carried forward to the next
accounting period
 Fixed Assets are open to misuse, abuse, theft and fraud
 Fixed Assets need to be retained in good working condition
 Fixed Assets need replacement, that requires planning & finance
 Fixed Assets are usually of high value

10. Any Questions08th March, 2014

11. What includes in FAR ??
 The format / details to be provided in a FAR generally depends upon the following factors
 Nature of assets
 Moveable assets or Immoveable assets
 Cost of assets & etc.…
 Customized reports on fixed assets required by management
 Extent of owned, and assets taken on lease / hire purchase
 Requirements of insurance company
 Location of fixed assets

12. Continue…..
 Data typically captured in an asset register include:
1. An asset tracking number, which is a unique identification number. The physical asset is
often marked with this identification number, either directly or with an asset tag
2. An asset description
3. The quantity of each asset
4. The manufacturer of the asset (if required)
5. The asset's serial number, which is the identification number assigned to the asset by its
manufacturer
6. Warranty coverage, which can be a simple yes/no indicator or a hyperlink to the
warranty contract

13. Continue…..
 Data typically captured in an asset register include:
7. An asset tracking number, which is a unique identification number. The physical asset is
often marked with this identification number, either directly or with an asset tag
8. Insurance coverage, which is a link to a file containing the detailed insurance
coverage. This can be useful when an insured event occurs
9. The asset's acquisition date
10. The acquisition cost of the asset
11. The date the asset was placed into service
12. The percentage of use for business purposes

14. Continue…..
 Data typically captured in an asset register include:
13. The asset's salvage value
14. The asset's useful life, which is the period over which the asset will be depreciated
15. The depreciation method
16. The current book value
17. The asset's physical location
18. The date of disposal, Exchange or Sale
19. The warranty expiration date

15. What is the Fixed Assets Issue Register (FAIR) ?
 While the FAR is maintained according to class of assets, the FAIR is maintained according
to the staff member who holds the asset. There will be one folio for each staff member who
has custody of an asset
 It will record the date of issue & return of each asset
 It will bear the signatures of the employee when he receives the asset & that of the
storekeeper the asset is returned
 The register has to be periodically reconciled with the FAR. All issues in the FAR should be
reflected in the FAIR
 The register helps in locating assets at the time of physical inventory taking

16. What are standard fixed asset control procedures ??
 Tagging & labeling of assets : Assets are labeled or tagged so that they can be easily
identified & their ownership established
 Insurance of assets against theft, fire, flood etc.- in most countries, only vehicles are insured.
But it is a recommended practice to insure all Enterprise assets. In some financing
agreements, this is mandatory
 Physical Verification of assets at regular intervals
 Log books for vehicles, construction equipment, generators etc. The log book records the
details of use of the asset & is usually maintained by the driver or operator. It helps in
identifying personal use of project assets. It is also used for calculating fuel consumption
 Cross referencing of financial & fixed asset records – done to avoid payment to supplier
before assets are recorded in the FAR. For internal control purposes it is vital to reconcile
the financial accounting records with fixed asset records

17. What is Physical Verification of Assets ??
 Conducted by an inter departmental team
 Should be undertaken under the supervision of external/ internal auditors at reasonable
intervals
 Surprise checks during audit/supervision visits
 To verify existence, condition & custody of assets
 Physical balances compared with book balances
 Variances reported
 Variances have to be adjusted in financial records after due authorisation

18. Physical Asset Inventory Form (PAIF)
 This is the form used for recording the results of Physical asset verification
 PAIF records the asset code, book balance, physical balance, condition, variance & possible
reasons for variance
 Surplus & shortage are equally serious & need further investigation
 Should be signed by all members of the verification team
 Preferably, it should be counter signed by the auditors

19. Any Questions08th March, 2014

20. Thank You