An organization, especially a large one, may possess a large quantity of fixed assets. Before computerization these would have been kept in a manual fixed asset register. A database enables this fixed asset register to be stored in an electronic form. A database file for fixed assets might contain most or all of the following categories of information.
- Code number to give the asset a unique identification in the database
- Type of asset. For example motor car, leasehold premises, for published accounts purposes
- More detailed description of the asset. For example serial number, car registration number, make
- Physical location of the asset. For example address
- Organization location of the asset. For example accounts department
- Person responsible for the asset. For example in the case of a company owned car, the person who use it
- Organization cost of the asset
- Date of purchase
- Depreciation rate and method applied to the asset
- Accumulated depreciation to date
- Net book value of the asset
- Estimated residual value
- Date when the physical existence of the asset was last verified
Obviously, the details kept about the asset would depend on the type of asset it is.
Any kind of computerized fixed asset register record will improve efficiency in accounting for fixed assets because of the ease and speed with which any necessary calculations can be made. Most obvious is the calculation of the depreciation provision which can be an extremely onerous task if it is done monthly and there are frequent acquisitions and disposals and many different depreciation rates in use.
The particular advantage of using a database for the fixed asset function is its flexibility in generating reports for different purposes. Aside from basic cost and net book value information a database with fields such as those listed above in the record of each asset could compile reports analyzing assets according to location say, or by manufacturer. This information could be used to help compare the performance of different divisions, perhaps, or to assess the useful life of assets supplied by different manufactures. There may be as many more possibilities as there are permutations of individual pieces of data.
Using spread sheets
A spreadsheet is essentially an electronic piece of paper divided into rows and columns with a built in pencil, eraser and calculator. It provides an easy way of performing numerical calculations.
The intersection of each column and row of a spreadsheet is referred to as a cell. A cell can contain text, numbers of formulate. Use of a formula means that the cell which contains the formula will display the results of a calculation based on data in other cells. If the numbers in those other cells change, the result displayed in formula cell will also change accordingly. With this facility, a spreadsheet is used to create financial models.