Nature and Tangible of Fixed Assets
Although all assets have some basic characteristics that are common, assets still have the following additional features:
Fixed assets are physical goods that are owned to facilitate / facilitate the production of other goods or to provide services for the company or its customers in the normal activities of the company. All fixed assets have a limited age, at the end of their age must be discarded or replaced. The value of a fixed asset stems from its ability to override another party in obtaining legal rights over its users and not from the imposition of a contract.
Fixed assets are all non-monetary, the benefits are received from the use or sale of services and not from the conversion into a certain amount of money. Generally the services received from Atativa cover a period longer than one year or one company operating cycle. However, there are exceptions. For example, a building or equipment is not reclassified as current assets if the remaining benefits are less than one year. In such cases, some elements have a shorter lifespan than a company operating cycle.
The elements of fixed assets have general characteristics and have some of the same financial reporting objectives. One of these goals is based on their uniformity in the accounting process. Fixed assets are held to obtain its services in the future.
Tangible Assets
These are tangible assets that are relatively permanent in use in normal company activities. The term relatively permanent indicates the nature in which the assets concerned can be used for a relatively long period of time.
AkitIva remains intangible owned by a company can have various forms such as land, buildings, machinery and equipment, vehicles, furniture and others. From the types of tangible fixed assets above for accounting purposes, groupings are made as follows:
Fixed assets whose age is unlimited as land for the location of companies, agriculture and animal husbandry.
Fixed assets whose age is limited and when they are used up can be replaced by similar assets.
Fixed assets that are of limited age and when they have expired, cannot be replaced by similar assets.
Classification of fixed assets based on type
Land, such as land that is used as a place for the establishment of company buildings.
Land improvements, such as roads around company locations built by companies, parking lots, and fences.
Buildings, such as offices, shops, factories and warehouses.
Equipment, such as office equipment, factory equipment, machinery, vehicles, and furniture.
Fixed assets can be divided into 2 angles:
Angle of substance
Tangible Assets or tangible assets such as land, machinery, buildings and equipment.
Intangible Assets or intangible assets such as HGU, HGB, Goodwill, Patents, Copyright, Copyright, Franchise, and others.
Shrinkage Angle Or Not
Depreciated Plant assets are depreciated fixed assets such as Buildings, Equipment, Machinary, Inventory and others.
Undepreciated Plant Assets are assets that cannot be depreciated such as Land.
Intangible Assets
Intangible assets are the company's fixed assets that cannot be physically stated. Examples of intangible assets are patents, trademark copyrights, research and development costs of deferred costs and concession rights for natural resources. Intangible assets can be obtained through purchases or self-developed by the company.
If an intangible asset is obtained by buying from an outside party, in addition to the purchase price which is included as the cost (cost) is additional costs to get it, such as costs paid to the government and notaries and related administrative costs. If an intangible asset is obtained by developing it themselves, then included in the acquisition price are the costs of materials, equipment, and facilities, salary and wage costs and indirect costs such as allocation of general and administrative costs.
Intangible assets may arise from:
Government-like patents, copyrights, frenchis, trademarks, and trade names.
Other companies, for example purchases that include payments for goodwill.
Certain agreements-like frenchise and lease.
Depreciation of Fixed Assets Method
There are various methods for depreciating fixed assets, which are as follows:
The straight-line method (Straight-Line Method), is the same amount of depreciation every year until its economic life is over. The formula is:
Depreciation:
Unit Units-of-Production Method. Depreciation expense that varies according to the amount of use of assets.
The formula is:
Depreciation:
Declining balance method. The biggest contribution is given to assets at the beginning of the period of use and will decrease with time. This method can produce a periodic depreciation expense that decreases during the estimated economic life of the assets. Depreciation in this method is determined in advance and the amount is the same every year. Depreciation is calculated by multiplying rates by the same small book value. Residual value (residual value) does not count.
(Sum of the Years Digits Method) Method of the number of years. This method is restricted for tax related purposes. The initial acquisition cost of the asset is reduced by the estimated residual value with a smaller fraction each year. The denominator in a fraction is the number of years of economic life of an asset. For example, fixed assets with an economic age of 5 years and have a denominator is 15 (5 + 4 + 3 + 2 + 1). In this method, the number of denominators must be calculated first
formula:
S = Denominator
N = estimated useful life
Asset Characteristics
The characteristics of these assets are related to the definition of assets. Assets need to be defined because the definition will be used to identify economic events that must be measured, recognized and reported on the balance sheet. The characteristics of these assets are:
Characteristics of future benefits (usage may vary such as potential services and economic resources)
The existence of economic sacrifice to obtain assets.
Relating to certain entities.
Shows the accounting process
Relating to the time dimension.
Relating to the characteristics of measurability
The definition proposed by APB shows that assets are an economic source of a company that is recognized based on generally accepted accounting principles (in the USA). APB emphasizes more on this understanding on the procedural side which shows the amount of economic resources recorded in the balance sheet and with the main objective of calculating periodic earnings.