Inventory of fixed assets - ways to carry it out
Entities keeping full books of accounts are subject to the provisions of the Accounting Act, where the inventory of fixed assets is described in Chapter 3. Find out about the methods, deadlines and obligations regarding the inventory of fixed assets in the company!
Inventory of fixed assets - deadlines
Inventory of fixed assets is usually carried out on the last day of each financial year. However, this is not a fixed deadline - the Act allows for the choice of a different date and allows its beginning not earlier than 3 months before the end of the financial year, and its ending by the 15th day of the following year. If the financial year is equal to the calendar year, it is the period from October 1 to January 15.
There are also other facilities, e.g. in the case of real estate classified as fixed assets and investments, as well as other fixed assets located in the guarded area, as well as machines and devices included in fixed assets under construction, you can take inventory every 4 years.
Methods of inventorying fixed assets
One of the three methods can be used to make an inventory of fixed assets. These are:
physical inventory - this is the most commonly used method. It is used for measurable and countable components and relies on their exact conversion;
confirmation of balances - consists in the bilateral confirmation of the accounting balances of liabilities and assets between contractors, creditors and debtors. This method is used only if own fixed assets are owned by other people, companies, enterprises and external fixed assets are in the company's possession;
verification of the record status - this method is used for fixed assets, access to which is difficult for some reason (for example, land and rights to real estate). It is based on comparing the accounting statuses in the accounting or inventory books with the data in the source documents.
Inventory of fixed assets - a way of documenting
Both the method of carrying out the inventory, as well as the principles of accounting and documentation should be determined by the entity that carries it out. When determining the principles of stocktaking, he should be guided by the size of the unit and the specificity of its activities.
For larger units, it will certainly be beneficial to prepare an inventory instruction, which would include the designation of inventoried assets, inventory methods, a detailed schedule for its implementation, the composition of the inventory commission and the rules for settling inventory differences.
The head of the entity or a person authorized by him may, on the basis of such instructions, issue orders on the inventory of individual assets in a given entity by way of physical inventory counting, covering, inter alia, the subject of the inventory, the date of taking the inventory (or the period if the inventory will be carried out longer than one day), persons carrying out the inventory and participating in the inventory.
Inventory of fixed assets its purpose is to establish the actual condition of individual assets, which should be included in the inventory sheets. The legal acts regulating the inventory taking, i.e. mainly the Accounting Act, do not contain detailed guidelines on this subject, but it is assumed that the inventory sheet should include such elements as the symbol and name of the inventoried asset, the amount found during the inventory in the appropriate units of measurement. In the inventories of fixed assets, the inventory commission should not enter their value given by the accounting department based on the data contained in the books of accounts. The sheets should also be permanently numbered and marked.
Art. 27 sec. 1 of the Accounting Act recommends appropriate documentation and linking the results of the inventory of fixed assets with the entries in the books of accounts. On the other hand, any differences between the actual state and the state shown in the books of accounts, which were disclosed in the course of the inventory, should be explained and accounted for in the accounting records of the financial year for which the inventory date was due, as required by par. 2 of the same article of the Accounting Act. The differences themselves may take the form of shortages or surpluses. As you know, a shortage occurs when the actual state, revealed during the inventory, is lower than that declared in the accounting books, and with a surplus - when the actual state is higher.
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Inventory differences can be accounted for as:
natural losses within the norms,
apparent shortages (it may be a fixed asset put in for repair or rented),
no fault of shortages and surpluses,
shortages caused by persons entrusted with the property.
The inventory commission finishes the physical inventory by drawing up a protocol of inventory differences. Then it is approved by the head of the unit. Such a document is the basis for recording inventory differences in the books of accounts. Any noticed shortages, surpluses and damages should be included in the balance sheet records not later than on the last day of a given financial year.