The ABC of assets

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The ABC of assets

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Abstract

Companies own assets of varying descriptions. They require the services of these assets for their everyday activities. An asset can be simply defined as an item which is owned by an individual or a company and that which has an economic value and is convertible to cash.

Depending on the nature of the business, fixed assets are considered the most important asset. They can directly determine the capacity of the company.
Fixed assets have a long life and meet the following criteria

Introduction
The acquisition and maintenance of fixed assets
The turnover rate of fixed assets
Determining the cost of acquisition
The acquisition by construction
The acquisition in the form of bulk purchase
The repair and maintenance, improvements, additions and expansions
1. Repairs and maintenance
2. The improvements and additions and expansions
3. The amortization, impairment and disposal of fixed assets
Different methods of depreciation
1. The straight-line
2. Calculations based on life
The declining balance method at a constant rate
The selection of managers
1. Depreciation and taxes
The impairment of long-term assets
The acquisition and amortization of intangible assets
Intangible assets with limited life
Intangible assets with indefinite life

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[...] The salvage value of assets at the end of its useful life and residual value at the end of its useful life for the company Elements 2 and 3 are estimates. Therefore, the amortization expense is an estimate. The useful life is the useful economic life of an asset for the company and not its total life for all potential users of the asset. The residual value is the net realizable value that the company believes it can recover when it no longer needs the asset. [...]

[...] The ratio is calculated as follows: Fixed Assets Turnover Ratio = Cost of Sales / Fixed Assets Fixed assets in the formula refer to: (current assets at beginning of year + assets at the end of the year) / 2. A low or declining ratio may indicate that the business is booming as a result of the acquisition of additional assets and expects to achieve a higher turnover in the future. III. Determining the cost of acquisition The acquisition cost is the amount of the consideration given to acquire the property and put into service. [...]

[...] Method of depreciation: Net Book Value x Rate of depreciation = depreciation expense Here, unlike other methods, we use the net book value (cost minus accumulated depreciation) of assets and not its depreciable cost. As the book value is decreasing every year, the depreciation expense also decreases. The net book value of an asset can be depreciated beyond its residual value. Therefore, if the calculation of annual depreciation charge produces an accumulated depreciation balance too high, the depreciation expense will be reduced so that the two values (accounting and residual) are equal. [...]

[...] The cancellation of all accounts relating to the assets transferred and the recognition of gain or loss that result. As it is not an operation that results from normal business activities, the gain or loss will be considered an infrequent and not typical (voluntary transfer) or as an extraordinary item (involuntary alienation) X The acquisition and amortization of intangible assets An intangible asset, like any other asset, derives its value from certain rights and privileges conferred by law to its owner. [...]

[...] On the other hand, certain assets earn greater profits during their first years of use. In this case, companies choose a method of accelerated depreciation. VII.1.L Depreciation and taxes Most companies keep two sets of accounts on their capital. The first is prepared in accordance with Generally Accepted Accounting Principles or GAAP for the preparation of financial statements to shareholders. It is used to determine the book value of assets. The second one is used to calculate the tax amount the company needs to remit. [...]

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