When it comes to the capital assets of a business, most business owners are most concerned with their capital gains tax liabilities. But you'll also need to make sure your fixed asset register complies with the International Financial Reporting Standards... here are four common errors to avoid.
Nigeria's accounting profession is in a tizz as the country's Small and Medium Scale Enterprises (SMEs) have been urged to get ready for the adoption of the International Financial Reporting Standards (IFRS) from 31 December 2014, says AllAfrica
Locally, our asset and investment management industry is also set to begin implementing IFRS more intensively.
Up to now, the simple statement of cash flows afforded users of financial statements the ability to analyse and assess a company's ability to generate cash, says Yusuf Dukander, project director: Financial Services at the South African Institute of Chartered Accountants (SAICA).
Now, IFRS will be the only permitted standards for maintaining accounting records and preparation of financial statements.
So you'd better make sure you're up-to-date!
But this panic isn't new.
That's because 'Ever since the adoption of International Financial Reporting Standards (IFRS) in South Africa in 2005… many entities in both the private and the public sectors have been finding the need to reconstruct their fixed asset registers, 'says AccountancySA
Make sure your asset register meets the International Financial Reporting Standards!
You can't just compile an asset register then leave it to gather dust.
To keep up-to-date, it's a good idea to update your asset register at least once a year, or any time your business makes a single major purchase, says FSP Business
Is it time to reconstruct your fixed asset register? Here are four signs…
says you'll need to reconstruct your fixed asset register in the following four cases:
If your business has a large number of fully depreciated/zero-value assets still in use.
If your asset descriptions are vague, like 'network'.
If you've bought new assets and not yet added them to your fixed asset register.
On the other hand, if your asset register still lists a number of assets as being depreciated, but they're no longer in use or you've already gotten rid of them.
One more step to ensure your accounting records are 100% accurate
Once you've ensured your fixed asset register is up-to-date, you'll have to make sure your existing Memorandum and Articles of Association is converted to a Memorandum of Incorporation by 30 April, says FSP Business
It's the only way to ensure your business is legally compliant with the International Financial Reporting Standards and the Companies Act!