MODULE 7 FIXED ASSETS STOCK Grade 12 Accounting

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MODULE 7 FIXED ASSETS & STOCK Grade 12 Accounting Module 2 Lesson 1 Created

MODULE 7 FIXED ASSETS & STOCK Grade 12 Accounting Module 2 Lesson 1 Created by Wendy Stegmann Hudson Park Kevin Golightly Alexander Road

FIXED TANGIBLE ASSETS • • Intended for day to day business operations NOT intended

FIXED TANGIBLE ASSETS • • Intended for day to day business operations NOT intended for re-sale Require large outlay Serve a useful purpose over a long period of time.

FIXED TANGIBLE ASSETS In this module greater emphasis is placed on reporting & the

FIXED TANGIBLE ASSETS In this module greater emphasis is placed on reporting & the validation of Fixed/tangible assets. The owners of the business will need to know: • Life expectancy of the asset • Benefits of the asset • When should it be replaced • Procedure in acquisition & disposal • Depreciation policy • Are the assets being effectively used?

FIXED TANGIBLE ASSETS 1. 2. 3. 4. 5. Grade 10 work recap: Buy an

FIXED TANGIBLE ASSETS 1. 2. 3. 4. 5. Grade 10 work recap: Buy an asset for cash DR Asset CR Bank Buy an asset on credit DR Asset CR Creditors Owners bring in assets DR Asset CR Capital Year end depreciation DR Deprec CR Acc Dep Year end transfer DR P & L CR Depreciation

FIXED TANGIBLE ASSETS ASSET DISPOSAL Transfer cost price DR. A/Disposal CR Asset Calc current

FIXED TANGIBLE ASSETS ASSET DISPOSAL Transfer cost price DR. A/Disposal CR Asset Calc current DEP DR. Deprec CR Acc Dep Reverse Acc Dep DR. Acc dep CR A/Disposal Record Sell price DR. Bank/Drawings/Creditors Debtors* CR A/Disposal 5. Calc Profit or loss DR. A/Disposal CR Profit on sale SP ? CV DR. Loss on sale CR A/Disposal SP > CV = PROFIT ON SALE OF ASSET SP < CV = LOSS ON SALE OF ASSET 1. 2. 3. 4.

CONTROL OVER ASSETS PURPOSE OF ASSETS: to assist in the generating of profits •

CONTROL OVER ASSETS PURPOSE OF ASSETS: to assist in the generating of profits • Assets idle or too old must be disposed/sold • Thus regular assessing of utilisation of fixed assets by management • Rule should be that assets are only used for BUSINESS purposes only

CONTROL OVER ASSETS Large undertakings need a FIXED ASSET MANAGER to control assets. Duties

CONTROL OVER ASSETS Large undertakings need a FIXED ASSET MANAGER to control assets. Duties & Skills would include: • Sound knowledge of procurement • Well versed in control of assets • Evaluate assets needs of business • Supervise efficient utilisation • Delegate responsibilities to others • Be able to handle disciplinary issues • Prepare reports/suggestions/proposals for owners • Advise on acquisition and disposal

FIXED ASSET REGISTER All assets must be recorded in the fixed asset register. WHY?

FIXED ASSET REGISTER All assets must be recorded in the fixed asset register. WHY? ? ? • All details regarding particular asset is recorded • Reconciliations with a physical count can be done • Can write reports on the assets i. e. the condition, usage, depreciation, • Loss & damages should be investigated & recommendations made.

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