Fixed assets
Fixed assets are bought to generate an income for the business
Uses of fixed assets
• Assist in the production of goods.
• Assist in administration.
• Make shopping convenient for customers.
• Speed up operating processes.
Purchases of fixed assets
• The asset will be recorded into the books at its cost price (historical cost concept).
• Cost price = purchase price + direct costs
• Direct costs are attributed to bringing the asset into a workable state and include:
transport costs, delivery costs or handling costs and installation costs.
Internal auditing of fixed assets
• Check mileage travelled on each vehicle.
• Check that vehicles are in working order.
• Check that assets are in working order.
• Ensure that the fixed asset register is properly updated when assets are brought, re-
evaluated, sold or depreciated.
• Perform a physical stock take of each fixed asset owned by the business and
reconcile this with the asset register.
Fixed assets are bought to generate an income for the business
Uses of fixed assets
• Assist in the production of goods.
• Assist in administration.
• Make shopping convenient for customers.
• Speed up operating processes.
Purchases of fixed assets
• The asset will be recorded into the books at its cost price (historical cost concept).
• Cost price = purchase price + direct costs
• Direct costs are attributed to bringing the asset into a workable state and include:
transport costs, delivery costs or handling costs and installation costs.
Internal auditing of fixed assets
• Check mileage travelled on each vehicle.
• Check that vehicles are in working order.
• Check that assets are in working order.
• Ensure that the fixed asset register is properly updated when assets are brought, re-
evaluated, sold or depreciated.
• Perform a physical stock take of each fixed asset owned by the business and
reconcile this with the asset register.
