Tagging Fixed Assets – Why so important?
In a large corporation, the task of identifying and locating a specific fixed asset can be difficult unless numbering is scientific, systematic, and up-to-date. A common problem in most companies is the improper maintenance of the FAR. Physical verification of fixed assets becomes a futile exercise unless the FAR is properly maintained.
It would be advisable to use a scientific numbering technique to identify fixed assets. The process of numbering fixed assets is called tagging.The purpose of Tagging assets is tracking movement of assets from one place to another place. An identification number (combination of alphabets, and numbers) is written on the asset. Engraving the identification number on the asset is advisable in the case of plant and machinery where there is heavy wear and tear.
A tag verifies the existence of assets and their location, aids in maintenance, provides a common ground for communication between the Accounts Department and the end-users and recording the net book value of asset in case of sale / scrapping.
It is not necessary to tag all fixed assets for example land, buildings and vehicles can be tracked through their registration papers.