Do You Know What and Where Your Fixed Assets Are? [Part 3 of 3]

3This is the final installment of a 3 part series in which our good friend Bob Kinsler discusses the importance and implications of knowing the location and usage of your Fixed Assets. If you missed the first or second installment, go back and take a look.

Fixed Assets Module Example

A fixed asset manager was implementing the fixed assets module of an ERP software where a lot of items noted on the books were not in the retail outlets. Upon inquiry to the controller and CFO, he discovered that one of the VPs of the firm had them all within an airport warehouse waiting either to be repaired or trashed. He had tried to send a few to a local salvage yard, but was told he had to pay for the items (mostly used restaurant equipment). He tried to take them to a local dump and also was informed that he would have to pay to dispose them there too. To balance out the fixed asset management systems, the fixed asset manager went through the warehouse (120’ by 600’) to find the items that were missing and found a mess where items where stacked up to a 20- foot level with small, dangerous aisle between them. Finding those individual assets missing would take a crew of five, four months or more since no one could provide serial numbers or actual descriptions.

It also was personal property tax reporting time, which this firm had not done since they opened their doors for business. With the deadline approaching and no way of extending it, the information from the system used previously was sent to the personal property tax assessors after informing the controller, CFO and CEO of what was found and why the report sent could have been a lot less. The total bill returned to the firm was $165,000 for the fixed assets and inventory—all inclusive of past years where they were fined for non-reporting and interest upon that.

The fixed asset manager later contacted a trade school that trained people to fix these items and made arrangements for them to pick up the assets they could use within their trade school—giving the students practical experience on the equipment they would be repairing in the real world. Since it was a trade school, they could deduct the fair market value of those assets on the firm’s federal income taxes for that year and the firm got a nice write up in the local newspaper for donating the equipment. They also obtained a low-fee preventative maintenance service from the school, which the firm used to cover their workers’ comp payment. Meanwhile the students would do the work with an instructor.

Mr. Kinsler is a United States Army veteran after 20 years of service where he first discovered his passion for Fixed Assets. Since then he has worked in a few different capacities but most notably his own endeavor, Kinsler Kapital Kost Kontrol where he consults with firms on Capital Cost Control procedures and policies.

 

 

Speak Your Mind

*