How to record Fixed Assets and Depreciation?

Audit Firms in Dubai UAE- United Auditing


a.Description of specific assets, their location, and if applicable, such specific identification as serial or other control/code numbers.

b.To keep better control over fixed assets, fixed assets register must be maintained at each location.

c. Cost, acquisition date, and date placed in service (when different from acquisition date)

d.Fixed assets cost includes acquisition cost plus other related expenses, such as insurance, customs fee, import duty, transportation and the like.

e. Addition, modification and maintenance expenses which will eventually increase the life or utilization of fixed assets should be capitalized.

f.  While calculating the depreciation deduct the salvage value from the cost of fixed assets.

g. Depreciable life and method of depreciation:

1. Straight Line Depreciation Method:

2. Double Declining balance method:

3. Sum of the year's digits method:

4.Units of production depreciation method.  

The rate of depreciation to be charged for each class of asset is to be determined by the Management. At the end of every month, depreciation is to be computed by the Accountant for all assets and the following entry is passed through a Journal Voucher:  

Dr.                                    Depreciation a/c                                                                xxxx

Cr.                                    Provision for depreciation (assets category)                xxxx  

Transfer of Fixed Assets between inter-company / divisions: When assets are transferred between inter-companies / divisions Fixed Asset Transfer Note should be prepared. 

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