The Fixed asset accounting is a sub-area of accounting that records non-current assets and documents their performance in value. This includes, in particular, assets used over the long term, such as machinery, vehicles or technical plant and equipment.
Asset accounting
The Fixed asset accounting focuses on assets that serve a business over the long term. It documents their acquisition or production costs as well as changes to their respective book value.
It thus forms a distinct sub-area within management accounting.
What is recorded in Fixed asset accounting?
Typically, the following information and changes, among others, are documented:
- acquisition or addition of an asset
- Acquisition or production costs
- Service life
- Depreciation
- Transfers and disposals
- carrying amount
Connection with depreciation
For assets with a limited useful life, performance is reflected, among other things, by depreciation. This makes it possible to trace how the carrying amount of a capital asset changes over its useful life.
The fundamental importance of this process is explained in the glossary term Depreciation (wear and tear allowance) explained.
Demarcation from other accounting areas
While the Fixed asset accounting looks at long-term assets, the Debtors ledger especially with receivables from customers and the Accounts payable with trade payables and other creditors.
The Fixed asset accounting therefore has its own technical focus within accounting.
