Fixed Asset Register 101
In our last blog post we mentioned keeping a fixed asset register off-site. You can come up with your own qualifications for your organization but typically anything that cost over $1,000 and has over a 1-year useful life should be included on this list. Fixed assets are items that cannot be easily converted to cash and are purchased with long-term use in mind. Land, buildings, furniture, and equipment are all examples of fixed assets.
The purpose of keeping a fixed asset register is two-fold. The first purpose is to keep a running list of expenses accumulated throughout the year that need to be capitalized at year-end. This moves them from expenses to assets on your balance sheet. From there they should be depreciated each year over its useful life. Most accounting softwares allow you to set this up to happen automatically so you shouldn’t have to manually make that depreciation entry every year following that initial entry.
The second reason to keep this list is for insurance claim purposes. The copy of the asset register list should be kept off-site in case something terrible were to happen to your organization’s property (vandalism, a fire, etc.). The asset register should include all information about the item such as when it was purchased, purchase price, expected useful life, a receipt of the purchase, a photo of the item, model number, and any other information you believe would be useful should you need to file a claim with insurance. You may even want to check with your insurance company to see what information they would require in the event of a loss. While we hope nothing bad ever happens to our property, it is better to be prepared should the need arise.
Examples of assets your church may have (not including the land and building which do not depreciate) includes:
- Computers, copiers, and office equipment
- Instruments
- Educational props
- Robes
- Curriculum
- Tables, chairs, desks, and other furniture
- Books and product in a gift shop
- Church van
- Artwork
- Large kitchen appliances/equipment and industrial coffee makers
Even if some of these items are not worth $1,000 and therefore you do not plan to capitalize/depreciate them, you may decide to add them to your asset register for insurance documentation purposes. Discuss this issue with the Board and come up with a plan on how you plan to qualify items to be added to the list.
Does your church or nonprofit keep an asset register? We hope that if you do not then this post will inspire you to start! It is a bit of a project up front but maintaining the list should be a breeze and could come in handy down the line.