Фото: Common errors in accounting for fixed assets

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Common errors in accounting for fixed assets

Reading time: 3 min.

Property, plant and equipment accounting is the process of tracking and documenting all company property, from buildings and vehicles to computers and furniture. It is an important part of accounting that helps to understand what the company owns, how much it is worth, and how these assets affect the financial condition of the company. Correct HR accounting not only ensures the accuracy of financial reporting, but also helps to optimize taxes and make informed business decisions.

Improper health record keeping can lead to serious consequences, such as:

  • Penalties: fines for untimely or incorrect amortization of property, for not displaying property in the balance sheet and other violations of tax legislation.
  • Distortion of financial statements: incorrect accounting records can lead to distortion of information about the financial status and results of the enterprise.
  • Tax disputes: in the event of errors in the accounting records of the FA, the tax authorities can initiate audits and charge additional tax liabilities.

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5 common mistakes in the accounting of fixed assets

  1. Incorrect determination of the original cost of property: the original cost of fixed assets does not include all the necessary costs associated with their acquisition or construction.
  2. Incorrect definition of the useful life of the FA: it is underestimated or overestimated.
  3. Improper application of asset depreciation methods: the depreciation method does not correspond to the type of assets or the expected way of their use.
  4. Untimely display of changes in the balance sheet value of assets: depreciation of fixed assets is not reflected, their revaluation is not carried out.
  5. Improper write-off of fixed assets: Fixed assets are written off from the balance sheet without proper registration.

These mistakes, or at least the consequences of making them, can be avoided if you update your knowledge in a timely manner and from time to time do an accounting audit or at least use the advice of more experienced colleagues when necessary.

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How can an accountant specializing in fixed assets help?

  • Consultations: Fixed assets accounting specialists can provide you with advice on determining the initial cost of fixed assets, their useful life, choosing a depreciation method, write-offs, and others.
  • Analysis: Specialists can conduct an analysis of your health accounting system and determine whether it complies with current legislation.
  • Development of an accounting policy: Specialists can help you develop an accounting policy for FA
  • Staff training: Specialists can conduct training of your staff on health accounting issues.
  • Representation in tax authorities: Specialists can represent you in tax authorities on issues related to personal injury accounting.

When choosing a specialist in accounting for fixed assets, you should pay attention to his experience working with enterprises in your industry, certification (for example, CAP or CIPA), as well as knowledge of specific software products for asset accounting. It is also recommended to check the presence of successful cases of solving complex issues of health accounting (if this is relevant for you) and reviews of previous clients.

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