All the commodities used by a company to sustain its activities are called fixed assets. Fixed assets differ from other commodities in terms of how they are stated in the company's list of assets, VAT calculations and purchase/sales operations. Therefore, fixed assets have to be tracked separately.
A certain percentage of the purchase price of a fixed asset is allocated as depreciation every year. Depreciation can be defined as a decrease in asset's value due to wearing or ageing. However, in addition to this application, the value of the fixed asset may increase due to changes in market conditions or high inflation. Hence, current laws allow revaluations for fixed assets in addition to depreciation.
Depreciation is applied using the normal depreciation and declining balances methods. Companies may revaluate their fixed asset using both methods. Both methods allow depreciation and revaluation.
A material card is opened for each fixed asset that is in possession or sold. Fixed asset information is entered through this card. Fixed asset transactions are recorded on slip lines by creating a link with the Fixed Asset card.