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Which Accounting Standards Deal With Accounting For Fixed Assets In UAE?

14/10/2021

Fixed assets are tangible or intangible assets owned by a company for use in its business activities. Tangible fixed assets have a physical form and can touch them, such as buildings, machinery, equipment, furniture, and fixtures. Intangible fixed assets are things like patents, goodwill, trademarks, and licenses. In the UAE, there are standards used by accounting agencies to ensure the proper management of fixed assets to avoid financial loss and reduce any potential risks involved in managing these assets. They include:

Fixed Asset Acquisition, Maintenance, & Disposal Records

In the UAE, it is compulsory for companies that own fixed assets to maintain records about the acquisition and disposal of such assets. These records help in calculating depreciation on fixed assets. The financial statements of a company will be incomplete without the amortization of its fixed assets. Such information is essential for investors to make relevant decisions about investing or divesting stocks based on the condition of the market. It is the responsibility of a fixed asset manager to track every stage of acquiring, maintaining, and disposing of a fixed asset. This refers to the process of planning and budgeting for the sale of an asset. The fixed asset manager should thus assess the value of the fixed assets to make it easier to work out their present value should there be any need to sell them shortly.

Periodic Physical Verification

According to UAE Accounting Standards, the accuracy of fixed asset records should be analyzed on a regular basis through physical examination. This is to ensure that the values assigned to fixed assets are reasonable, appropriate, given the oldness and condition of the assets, as well as any changes in their value. Physical verification of fixed asset records can also help identify discrepancies between information recorded for the asset on its account and its actual state or location. Many businesses in the UAE lose control of their fixed assets because no one observes the previous ones once the new versions arrive. It does not have a direct influence on your firm's activities or output, but your business will incur losses if your assets remain to disappear. A fixed asset manager should be able to maintain track of all fixed assets and prevent loss by performing periodic physical verifications.

Examine Any Assets That Are No Longer In Use or Are Out Of Date

Many firms have a lot of assets that they do not use, but they still keep them. Because they do not want to sell them or because they believe that one day these assets will be useful. For instance, when a corporation buys personal laptops, the old ones are kept in a store and left to rust. A good fixed asset manager should be in charge of keeping track of and managing such firm assets. While most fixed assets that are not actively in use are intended to be dumped or donated, fixed asset standards need that these assets to be documented. In order to be able to trace them in some way.

Curbing Some Assets Movement

Certain fixed company assets continue with the firm permanently, possibly since they are bespoke equipment specifically for a particular function and cannot be moved. Yet, there comes a point when these assets are no longer valuable and are mistreated as a result. The staff has been seen to get the business property without following proper procedures, which can be bad for the firm. In such cases, tracking devices are sometimes put on fixed assets to prevent them from being unlawfully disposed of or transported outside of a specific area.

The aim of these standards is to provide a framework for ensuring that fixed assets are managed and reported per relevant regulations and best practices. So, businesses should deal with such fixed asset accounting standards by hiring the best fixed asset management services in UAE. Organizations need to reduce losses due to theft, fraud, or conspiracy. It's also vital to keeping track of the value of assets, which are prone to deteriorate over time. This is also helpful to determine whether an asset needs replacing or repaired. As a result, it is reasonable to conclude that a fixed asset registrar can assist you in maintaining the condition of your assets. All information will be stored for accountability in the event of any repair or maintenance costs.

If you're looking for the best accounting firm in Dubai, UAE to help you manage your fixed assets while following the given rules, then you’ve come to the right place. ARC Associates, the top accounting firm in Dubai! With all the investments you have made in your company, it is important to ensure that your fixed assets are properly accounted for. We specialize in this area and can help you manage them effectively so that they do not lead to financial penalties or tax issues. If you want to know more about our services, please get in touch with us today!