What types of subsidiary ledgers are used in manufacturing companies (Part II)?

3. Fixed asset subsidiary ledger and rollforward

Fixed asset subsidiary ledger provides a listing of fixed assets and related information such as acquisition date, depreciation method, useful life, historical cost, accumulated depreciation, fixed asset general ledger account, and so on.

Details of fixed assets can be maintained within an accounting software used by a company (e.g., Microsoft Dynamics, SAP, QuickBooks), fixed asset accounting software, in a spreadsheet or on paper (rare).

Similar to other subsidiary ledgers, fixed asset subsidiary ledger balances should be reconciled to respective general ledger accounts on a regular basis. Note, however, that in addition to being reconciled to general ledger accounts, fixed asset subsidiary ledgers are used to prepare fixed asset rollforwards.

Fixed asset rollforward is a schedule showing - for fixed asset historical costs and accumulated depreciation, in total or by fixed asset class - balances at the beginning of a period, additions, disposals, transfers, and balances at the end of a period. Fixed asset rollforwards are used to analyze activity in fixed asset balances, prepare cash flow statements, etc.

An example of a fixed asset subsidiary ledger as of a balance sheet date is presented below.

Asset #

Asset
Group

G/L
Account

Useful
Life

Acquisition
Date

Depr
Method

Cost

Accum
Depr

10001

1

1400

n/a

5/1/20X1

n/a

10,000.00

0

10002

2

1401

40

1/31/19X8

SL

50,000.00

18,657.53

10003

3

1402

10

8/15/20X2

SL

7,982.12

301.79

10004

4

1403

7

1/1/19X5

DD

9,208.99

9,208.99

10005

5

1404

5

7/31/20X2

SL

20,145.89

1,688.94

…

…

…

…

 

…

…

…

           

97,337.00

29,857.26

Asset group has the following meaning: 1 indicates land, 2 – buildings, 3 – machinery and equipment, 4 – office furniture, 5 – assets under capital leases, and so on.

Useful life is normally presented in years or months. In our example, the useful life is presented in years. Note that asset group 1 – land – doesn’t have a useful life assigned because land is not depreciated. For asset group 5 – assets under capital leases – there are special rules as to what useful life is assigned to a particular asset (depending on lease agreement terms).

Depreciation method has the following meaning: SL indicates straight-line method and DD indicates double-declining method. There may be other depreciation methods.

Cost represents the cost of fixed assets. For more information about what is included in the cost of fixed assets, refer to the tutorial Accounting for long-term assets.

Accumulated depreciation is cumulative depreciation as of the balance sheet date. Note that asset 10001 – land – doesn’t have accumulated depreciation because land is not depreciated. Also note that asset 10004 has accumulated depreciation equal to its cost; this means the asset is fully depreciated and its net book value (i.e., cost less accumulated depreciation) equals zero.

In addition to fixed asset subsidiary ledgers, there may be other reports related to fixed assets, such as the report of fixed asset disposals or current period depreciation report.

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