Depreciation generally refers to two very different but related concepts:
- the expected decrease in value of assets - this affects the value of a business
- the allocation of the cost of assets to the period in which it is utilized - this impacts net income.
Methods of Depreciation
There are many types designed for different situations and applications. Some commonly used ones are:
A. Straight line - frequently 3 year and 5 year
B. Declining balance - commonly double the straight line rate
C. Activity depreciation - based on the use of the asset
D. Tax depreciation - where the asset is consumed and written off as an expense
Most organizations require the acquisition and use of a multitude of assets in order to conduct their business. Unless there are very few assets; the location, condition and details associated with an asset should be very important to that business. The cost of replacing the asset and working less efficiently or stopping production until replacement occurs can be significant even catastrophic to business health. What is the best method for a business to be proactive on it's assets? A robust, easy to administer program that specifically tracks all of the details of that asset. An accounting program will keep an accurate cost of the asset, depreciation calculated annually and date of acquisition. However, other information is just as important if not more important. Where is the asset, who used it last, what condition is it in, was any required maintenance or inspections done and when and by who, has it been transferred to another location or user, what operating system does it have loaded (computer assets), any updates, what are all of the assets in a certain location, has someone signed for the use of an asset and what was the final disposition of the asset; these are all questions that can be answered by a quick search of your asset tracking program. If you are using a spreadsheet currently; consider upgrading now to a program that will provide improved visibility, increased security and enhanced chain of custody for the assets that keep your organization productive and efficient.
Cloud based asset tracking programs are the benchmark of the industry currently. This type of tracking system eliminates the need for consistent back up by your personnel, is very secure and offers global visibility while reducing your busy IT department's involvement to virtually zero. Installation and deployment are fast and the on line support is also typically fast. Robust and flexible to fit most organization; you can evaluate the tracking, ease of use and many features live in your office to determine if it will resolve your asset tracking needs and concerns. The best asset tracking systems will offer several different methods of depreciation for each asset in addition to the ability to track all of the details of an asset (model, serial number, manufacturer, attributes, maintenance records, warranty information and much more) plus current location and a complete chain of custody. They will also offer a variety of devices to operate the program on such as mobile handheld computers, tablets, signature pads, mobile printers and card/ID scanners.
Additional information on cloud based tracking systems is available at sqbxcloud.com.
