A company may use different depreciation methods for different types of assets. All businesses keep a depreciation schedule for their assets showing all the relevant details about each asset. Here is the basic information that shows up on a depreciation schedule:
Description: The type of asset and any other identifying information about the fixed asset. For a truck, the description may include the make and model of the truck and its license plate number.
Cost: The purchase price of the asset plus any other spending that should be added to the asset’s cost. Although most additions to purchase price take place when the company acquires the asset, the fixed asset cost can be added to after the fact if material renovations are performed.
Life: How long the company estimates it will use the fixed asset.
Method: The method of depreciation the company uses for the fixed asset.
Salvage value: The estimated value of the fixed asset when the company gets rid of or replaces it.
Date purchased: The day the asset was purchased.
Current depreciation: The depreciation expense booked in the current period.
Accumulated depreciation: The total amount of depreciation expensed from the day the company placed the fixed asset in service to the date of the financial report.
Net book value: The difference between the fixed asset cost and its accumulated depreciation.
Depending on the size of the company, the depreciation schedule may also have the fixed asset’s identifying number, the location where the fixed asset is kept, property tax information, and many more facts about the asset.
In order to audit fixed assets, auditors may perform a physical count of the assets. If you store tools and equipment in a warehouse, for example, the auditors want to verify that each asset on your fixed asset listing (accounting records) is actually located in the warehouse.
Assigning each asset a unique number is important, so that the number on the fixed asset listing can be matched to the same number on the asset itself. That policy allows the audit process to go smoothly.
Having a nicely organized depreciation schedule allows the company to keep at its fingertips a summary of activity for each fixed asset.
