Fixed assets are those assets that the establishment purchases with the aim of using it and assisting it in carrying out its activity for several years, and the aim of purchasing them is not to resell them, such as buying lands, buildings, production machines, cars, furniture, and others.
Accounting treatment of fixed assets
The accounting treatment of fixed assets differs according to the method of obtaining them, and among the ways in which the establishment obtains fixed assets are as follows:
The accounting treatment of fixed assets differs according to the method of obtaining them, and among the ways in which the establishment obtains fixed assets are as follows:
cash purchase
Get the original package within
Obtaining the original as a gift or grant
Proof of assets in case of cash purchase
Fixed assets are recorded in the books according to their cost, and the cost of the fixed asset is equal to the purchase price shown on the invoice in addition to all expenses incurred in order to obtain the asset, such as transportation expenses, customs duties, clearance, insurance, commissions, and others (acquisition expenses).
Get the original package within
Obtaining the original as a gift or grant
Proof of assets in case of cash purchase
Fixed assets are recorded in the books according to their cost, and the cost of the fixed asset is equal to the purchase price shown on the invoice in addition to all expenses incurred in order to obtain the asset, such as transportation expenses, customs duties, clearance, insurance, commissions, and others (acquisition expenses).
Example
The facility has imported a machine for the manufacture of wooden doors and has incurred the following expenses until the machine is ready for work:
The facility has imported a machine for the manufacture of wooden doors and has incurred the following expenses until the machine is ready for work:
Recording the entry in the daily book, noting that these amounts have been paid in cash.
Solution method:
The entry is registered and the cost of the original is proven according to the purchase price shown on the invoice, in addition to all the expenses that were spent until the machine was ready for work, which is equal to 13,000 dollars:
The entry is registered and the cost of the original is proven according to the purchase price shown on the invoice, in addition to all the expenses that were spent until the machine was ready for work, which is equal to 13,000 dollars:
Original registration
Get the original package within
In the event that the establishment purchases a group of assets in one transaction, then the cost of each asset is determined separately according to its prevailing market price, then the market percentage for each asset is extracted by dividing the value of the asset by the total market asset values, then we multiply that percentage by the cost of purchasing the transaction, to be Determine the cost of each asset separately, and the following example shows the method.
Example
The facility purchased a deal worth $7,000 in cash that includes the following assets: furniture, computers, heating and cooling equipment.
The facility purchased a deal worth $7,000 in cash that includes the following assets: furniture, computers, heating and cooling equipment.
Required :
Recording the daily entry of the purchase process after determining the actual cost of each of the purchased assets.
Recording the daily entry of the purchase process after determining the actual cost of each of the purchased assets.
Solution method:
First: The cost of each asset is determined separately according to its market price (the market value of the asset), and let us assume that the market value of each asset was as follows:
First: The cost of each asset is determined separately according to its market price (the market value of the asset), and let us assume that the market value of each asset was as follows:
Amount statement
Furniture 3000
2000 computers
Cooling and heating devices 5000
The total market value of assets is 10,000
Second: The market percentage for each asset is extracted separately by dividing the market value of each asset by the total market values of the assets as follows:
Furniture 3000
2000 computers
Cooling and heating devices 5000
The total market value of assets is 10,000
Second: The market percentage for each asset is extracted separately by dividing the market value of each asset by the total market values of the assets as follows:
The name of the asset The market value of the asset The sum of the market values of the assets The market percentage of the asset
Furniture 3000 10000 30%
2000 computers 10000 20%
Cooling and heating devices 5000 10000 50%
Total 10,000
100%
Third: Extracting the actual cost of the asset by multiplying the market percentage extracted for each asset by the purchase price of the transaction as a whole, as follows:
Furniture 3000 10000 30%
2000 computers 10000 20%
Cooling and heating devices 5000 10000 50%
Total 10,000
100%
Third: Extracting the actual cost of the asset by multiplying the market percentage extracted for each asset by the purchase price of the transaction as a whole, as follows:
The name of the asset The market percentage of the asset The transaction price The actual cost of the asset
Furniture 30% 7000 2100
Computers 20% 7000 1400
Cooling and heating devices 50% 7000 3500
Total 100%
7000
Now that the actual cost of each asset has been determined, the entry will then be recorded in the journal as follows:
Furniture 30% 7000 2100
Computers 20% 7000 1400
Cooling and heating devices 50% 7000 3500
Total 100%
7000
Now that the actual cost of each asset has been determined, the entry will then be recorded in the journal as follows:
Under the purchase of assets within a transaction
Debtor creditor statement
Debtor creditor statement
of those mentioned
2100
h/ furniture
1400
h/ computers
3500
H / Cooling and heating devices
7000 to h/ fund
Buying assets within a deal for cash
Obtaining the original as a gift or grant
In the event that the asset is obtained as a gift, grant or donation, it is considered the company’s revenue, and the value of the asset is recorded according to its prevailing market price as follows:
In the process of getting out as gifts
Debtor creditor statement
13,000
From h/ the name of the original
Debtor creditor statement
13,000
From h/ the name of the original
13,000 to h/revenues from grants and gifts
Assets received as gifts
Fixed assets control
Fixed assets are important resources and assets that help the establishment in carrying out its activity, and this requires the establishment to follow all means and procedures to preserve these assets and protect them from theft or loss, and among these procedures and control methods is that a special statement is prepared for each of the assets called an inventory statement Fixed assets, so that it contains all the details related to the asset, such as the date of purchase of the asset, the cost of its purchase, the graphic additions to the asset, its value as scrap, the estimated useful life of the asset, as well as the depreciation method, the annual depreciation value, and the accumulated depreciation at the beginning of the period and the end of the period, etc., and this is a simple inventory form for an office that contains among its assets on the furniture.
Furniture inventory statement for the year 31/12/2015
Name of the asset Cost of the asset $ Depreciation rate % Date of use $ Cumulative depreciation at the beginning of the year $ Annual depreciation $ Cumulative depreciation at the end of the year $ Net book value $
Offices 5000 10% 01/01/2013 1000 500 1500 3500
Chairs 1000 10% 01/01/2014 100 100 200 800
Khazaen 2000 10% 01/01/2015
200 200 1800
8000 10%
800 1900 6100
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