Objects that no longer exist have no value. Therefore, the existence of fixed assets must be checked by means of an annual physical inventory. The individual objects in fixed assets must therefore be recorded such that they are identifiable.
In Chapter 1, we referred to the inventory—the record (directory) of the individual asset objects. This directory must report the asset objects present on a specified date. These objects must be determined by a physical check, also known as a physical inventory. The word “inventory” is derived from the Latin “invenire”, meaning to find something. In this chapter we will explain what you have to list in the fixed assets inventory and how to perform the physical check.