Accounting of Outsourcing of Fixed Assets
Accounting of Outsourcing of Fixed Assets
- (Fixed Assets) -
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Accounting Services (Fixed Assets)

Fixed assets often comprise a significant portion of the total assets of an enterprise, and therefore are important in the presentation of financial position. Furthermor,, the determination of whether an expenditure represents an asset or an expense can have a material effect on an enterprise's reported results of operations.


In certain circumstances, the accounting for an item of fixed asset may be improved if the total expenditure thereon is allocated to its component parts, provided they are in practice separable, and estimates are made of the useful lives of these components. For example, rather than treat an aircraft and its engines as one unit, it may be better to treat the engines as a separate unit if it is likely that their useful life is shorter than that of the aircraft as a whole.


An enterprise may decide to expense an item which could otherwise have been included as fixed asset, because the amount of the expenditure is not material.

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