Accounting for Fixed Assets

When accounting for fixed assets, the great system implementation debates is:  Do I use the fixed asset module in my enterprise resource software, or a third party product?  First we must decide on requirements such as: property tax reporting, GAAP, financial statement presentation, and federal tax reporting?

The first issue to figure out is whether or not your software accommodates fixed assets well through to the general ledger system.  This question can be complex.  However, if the fixed asset system does not work properly it usually lies in the disposal issues and change issues.  When an ERP Accounting system does not do this effectively than a third party software such as a Sage FAS (Fixed Asset) system is a fantastic solution.  These third party products are usually very reasonable and priced between $100 and $900.  In order to answer that question it is made simple by doing a couple of tests on disposal and change type transactions.

Usually a third party software system is the most efficient solution, since most accounting software systems do not manage fixed asset well. The first consideration must be asset ID nomenclature and departmentalized cost traceability.  Third party software systems are fully configurable for imported into most ERP systems, such that your monthly depreciation is journalized via an import interface monthly to the general ledger system.  Fixed Asset systems must be configured to provide for GAAP, property tax, and state and local income tax filing.  I have implemented several of these types of systems inside and outside of ERP systems with success.  Asset identification nomenclature must be designed with flexibility and growth in mind to accommodate future requirements that may be anticipated, or unanticipated.  It is also wise to configure your asset nomenclature with your general ledger department flow for ease of cost analysis.  Achieving these goals simply requires proper prior implementation planning.