What the register is for
A fixed-asset register lists the things the business has bought and expects to use for more than a year: vans, machinery, tills, laptops, a shop fit-out. It links what you paid for, what you actually still have, and the depreciation in your accounts. Without it, the asset figure on your balance sheet is a number nobody can explain, and depreciation is a guess.
What to record for each asset
For each item, note what it is, where it lives, the purchase date, the cost, the supplier, how long you expect it to last and who looks after it. Attach the invoice. Agree a capitalisation policy with your accountant, for example anything over a set amount that lasts more than a year. A big payment isn’t automatically an asset, and a big repair bill may simply be a cost for the month.
Make it agree to the accounts
The cost and depreciation in the register should match the balance sheet, category by category. When they don’t, the reasons are usually simple. An asset was posted straight to expenses, something sold or scrapped is still on the list, or a purchase is in the accounts but never made it onto the register. Finding these each month is a quick job. Finding them at year end takes days.
Record changes as they happen
Buying, selling, moving or writing something off: every change needs a short, approved note. Once a year, walk round and check the bigger items are still there and still working. That’s how you find the laptop that left with a former employee, or the machine that’s been broken since spring. Tax works differently from the depreciation in your accounts, so capital allowances are one for your tax adviser.
Example: a small construction firm’s register lists 14 vans, but the insurance schedule only has 11. Three were sold over two years and the sale money was posted as income, while the vans stayed on the register and kept being depreciated. A morning matching the register to the logbooks, sales paperwork and accounts sorts it out. The profit on sale is corrected, the balance sheet is right, and the insurer gets an accurate list.
What to check
- Every asset linked to its invoice
- A written capitalisation policy
- Register totals that match the balance sheet
- Sales and disposals recorded that month
- A yearly check of what’s really there
Where to start
Take your latest register, the asset balances in your accounts and a handful of recent purchases. Where they don’t agree shows how much tidying is needed. ICAEW’s guidance on property, plant and equipment is useful background.