The Conceptual Fixed

Asset System
CONTENTS
The Conceptual Fixed Asset
System
The Physical Fixed Asset System

Controlling the Fixed

AssetTSystem
The Conceptual Fixed Asset System

WHAT IS FIXED ASSET?

•Fixed assets are the property plant and equipment used in the operation of a
business.

WHAT IS FIXED ASSET SYSTEM?

• fixed asset system processes transactions pertaining to the

acquisition, maintenance, and disposal of its fixed assets.
SPECIFIC OBJECTIVE OF FIXED ASSET SYSTEM ARE:

DIFFERENCE FFERENCE BETWEEN EXPENDITURE CYCLE AND FIXED ASSET

SYSTEM
THE LOGIC OF A FIXED SSET SYSTEM (FAS)

•Asset Acquisition
•Asset Maintenance
•Asset Disposal
ASSET ACQUISITION

> New need or replacement

> Authorization and approval

> May involve cost benefit analysis

> Acquisition is similar with assets handed over to manager not to

store and FA department will keep the records rather than
inventory.
ASSET MAINTENANCE

>asset maintenance involves adjusting the FA subsidiary account

balances as the assets depreciate over time or with usage.

ASSET DISPOSAL

>an asset has reached the end of its useful life or when
management decides to dispose of it.
DEPRECIATION SCHEDULE

>charts the loss in value of an asset over the period you've

designated as its useful life, using the accounting method you've
chosen.

COMPUTER-BASED FIXED ASSET SYSTEM

>refers to effective Asset management of an organization using

computer applications.
Acquisition Procedure
-The process begins when the fixed accounting clerk receives a receiving
report and cash disbursement voucher. These documents provides
evidence that the firm has physically received the asset and show its cost.
Asset Maintenance

-the fixed asset system uses the depreciation schedules to record

end-of-period depreciation transactions automatically.
-The specific tasks include:

1.calculating the current period's depreciation

2.updating the accumulated depreciation and book value fields in
the subsidiary records.
3.posting the total amount of depreciation to the affected general
ledger accounts.
4.recording the depreciation transaction by adding a record to the
journal voucher file.
Disposal Procedures
-The disposal report formally authorizes the fixed asset
department to remove from the ledger an asset disposed of by the
user department. When the clerk deletes the record from the fixed
asset subsidiary ledger, the system automatically:

1.post an adjusting entry to the fixed asset control account in the

general ledger
2.records any loss or gain associated with the disposal ,and
3. prepares a journal voucher
CONTROLLING THE FIXED ASSET SYSTEM

Authorization controls

> fixed asset acquisition should be formal and explicitly authorized.

Supervision controls

> because capital assets are widely distributed throughout the organization, they
are more susceptible to theft and misappropriation than inventories that are sec
ured in a warehouse.
Independent Verification controls

> Periodically, the internal auditor should review the asset

acquisition and approval procedures to determine the
reasonableness of factors used in the analysis.

> Internal auditor should verify the location, condition, and fair
value of the organization's fixed assets against the fixed asset
records in the subsidiary ledger.
 G P
R O U THANK
YOU
4

Tampoy Aljelica Serioza Janette

Navida Melanie Valdez Carl Adrian