Overhauling of your fixed assets register
IFRS Watch - Issue 35
A lot of companies are faced with the challenge of maintaining a proper fixed asset register. Previously, most entities would simply select a useful life that was convenient for tax purposes, or that seemed reasonable at initial recognition, and then never gave any further thought to adjusting that useful life estimate in future periods, regardless of changes in intention or circumstances.
Similarly, residual values were not frequently, if ever, updated. But perhaps worst of all, at least from the perspective of this article, was the habit that entities had of recognising groups of assets as single line-items in their asset registers (hereafter referred to as "grouped assets"). Despite the fact that entities have been exposed to the new way of doing things for some time now, many auditors will testify that fixed assets continue to be a major and ongoing problem during many audit exercise.