It's not that Uncle Sam does not want your clients to deduct those big-ticket items that are critical to running almost any business. The less cynical among us would nod and agree with the Internal Revenue Service's position that the cost of big-buck expenditures should be matched with the useful business life of the asset.Then there are those who suspect that the government would simply prefer that you don't apply the full cost of that Learjet that your client picked up this year to offset their current fiscal year's revenue.
Either way, depreciation and amortization have been around for quite some time, and definitely show no signs of going away. Instead, the methods used to calculate how much your client should deduct each year, and how many years the purchase needs to be spread over, just keep getting more and more complicated.
The major reason for this complexity is an effort on the government's part to match the process with the reality of how different types of assets actually change in value over the years. Of course, truly matching some assets to their fair market value is difficult. That new car that your client bought for $45,000 lost much of its value the moment it was driven out of the dealership. No matter how accelerated the depreciation method is, it's not really going to match up with how much of the value is lost right up front.
Making these kinds of depreciation and amortization calculations isn't always easy. If all your clients' assets are depreciated using straight line, declining balance, double declining balance, and other such methods, a spreadsheet is probably fine for making the computations. It gets a lot more complicated trying to cobble together a solution when you have a mix of accelerated cost recovery system, modified cost recovery system or alternative depreciation system with varying recovery periods. Add in a large number of assets, and the need to maintain cost, acquisition and disposal dates, and also calculate the gain on disposed assets depreciated past their sales price, and using a spreadsheet for fixed assets becomes a recipe for disaster.
Specialized fixed assets software does contain a calculation engine. That's necessary for the complex sets of computations that are required with some of the more esoteric depreciation and amortization methods and periods.
This type of specialized software for performing fixed asset applications also has a sophisticated database capability. These features are needed to support the acquisition and disposition of the assets, as well as to maintain logical groups of differing kinds of assets, so that you can easily group them in the proper places in the client's permanent books of record and financial statements.
Fixed asset software is widely available from numerous vendors. Some applications are more or less designed as stand-alone applications that can be used with pretty much any accounting and tax prep applications. Others are designed to interface with the vendor's other applications, though even these usually can export the data to be used with applications from other vendors.
To help you target the best application for a particular client, we examined seven popular fixed asset programs.
Is this even legal?
Every time we come back to examine fixed asset applications, we're again struck by the fact that it's officially OK, and even required, that you maintain multiple sets of books for a client. Of course, the kinds and ways that these books are maintained are rigidly constrained. If you or your client step too far outside of the guidelines, these overly creative accounting practices can land either or both of you in hot water.
Still, where in many cases maintaining multiple sets of records where the same assets have varying values would be considered illegal, the fact of the matter is that different agencies see asset depreciation and amortization in different lights, and prescribe different methods and time periods for performing this process. So not only is maintaining different sets of books not illegal in this case, it's required.
If this wasn't complicated enough by itself, add in the fact that there is often a lot of leeway in exactly how and when to apply specific methods and periods. A good fixed asset application suggests the "correct" depreciation method and life according to published IRS and other agency promulgations. It also allows you to override these default methods and lives if you can justifiably make the case that another method or life is more appropriate to the particular client or asset.
Multiple divisions, or companies with multiple locations, sometimes in different countries, further complicate the process, especially when you need to roll these up for corporate-wide reporting. This isn't always particularly easy to do with many accounting packages, and it's no easier when the application is fixed assets.
One size fits some
To a large extent, all fixed asset applications are going to have a large number of similarities. That's because the end result, a multiple set of asset records with different depreciation amounts and calculations, is the same no matter whose software your client buys.
There are differences between the vendors' offerings, though. And it's these differences that make a particular package more or less appropriate for a particular client. As with any application, the hard part of the process is effectively matching up a client's specific needs and wants with a particular vendor offering.
As a general rule, you want to be sensitive to an application's capacity and, if your client has multiple locations, how well a particular vendor's package handles this physical and logical dispersion of assets.
It seems somewhat strange that, in these days of 500GB hard disk drives, capacity should be an issue. The problem doesn't lie with the hardware. Most of the packages we looked at will run on a basic PC with a Pentium-class CPU, though there are some that suggest a more robust hardware configuration.
Rather, it's the underlying database construction that sometimes throws a capacity monkey wrench into the mix. Some older products still place limits of 32,000 on some of the values, including the number of assets, and $99,999,999 on dollar values. Those are pretty high limits, but a large client with multiple locations and lots of assets could conceivably blow through them.
Of course, capacity isn't the only feature that you should be looking at. You'll want the software to have wizards that take your clients through the processes of deciding what depreciation method and life to use with a particular asset. Of course, you should be able to back out of the method should you decide, after a consultation with the client, that a different method or life is more appropriate. Hopefully, the software's wizard should be accurate, picking the correct method and life for the type of asset being depreciated or amortized. In that case, you'll change it only to take into account the client's specific circumstances.
Keep in mind that the rules for applying depreciation and amortization change very frequently. You'll want to make sure that you select a vendor who is diligent about updating their software frequently, and follow up with your client so that they take advantage of available updates.
If budget is a consideration, and it often is, you'll find plenty to choose from. The seven packages we tested span the gamut, from entry-level prices to several thousands of dollars. If you purchase a suite of applications, the price tag can be even higher. Of course, purchase price is just the beginning. Yearly maintenance and updates are a continuing expense, as is the process of training your clients' employees to use the software.
Given this initial and ongoing expense, it pays to advise your clients to install and run the fixed asset application on a reliable PC and exercise good back-up procedures. After all, in most companies, fixed assets is a mission-critical task.
AccountantsWorld Fixed Assets Relief
Priced at only $595 for the single-user version, AccountantsWorld might want to get George Forman to redo the commercial he did a few years back for Midas Muffler - "You're not going to pay a lot for that fixed asset software!"
Visiting AccountantsWorld's Web site, it isn't immediately apparent that the company is a provider of software applications. The site itself serves as a portal and community for accountants. A link to the site at www.accountantsoffice.com uncovers the software applications. AccountantsWorld also serves as an application service provider for many of the accountant-oriented applications that the vendor offers under the Accountant's Office and Accountant's Relief labels. These applications include write-up, payroll, practice management and financial planning.
The Fixed Assets Relief application is highly integrated with the other "Relief" programs, so if your client prefers that you maintain the asset records, you can easily integrate the data with the Accountant's Relief write-up. You can also perform this integration with the Fixed Asset Relief running at client sites, but you won't have much difficulty getting the data into other vendors' programs, even if your clients are running the software as a stand-alone application.
Fixed Asset Relief handles pretty much any depreciation or amortization scenario. It has the standard depreciation methods, including short-year calculations for multiple years and support for the special 50 percent depreciation under the Jobs and Growth Tax Relief Reconciliation Act of 2003. You can also customize the existing methods, should your client have special circumstances.
Import and export capabilities are fairly basic, and provide comma-delimited files for import and a direct export of depreciation data to the Accountant's Relief write-up package. Reports are clear and understandable, and while the software only provides 15 reports, you can create custom and ad hoc reports using the included report writer. A query manager lets you access the asset database based on asset characteristics.
Data entry is especially good, with "speed pads" that allow you (or your clients) to save commonly used text and retrieve it with a single keystroke as you perform data entry. This is especially useful when you have long asset descriptions. As with many of the applications we looked at, Fixed Assets Relief speeds the process of entering new assets by letting you copy data from existing assets.
Fixed Asset Relief doesn't require a super-powerful PC, but it does require an Internet connection, preferably broadband, to download updates and additional products.
There are more capable and powerful fixed asset systems available, including some reviewed in this roundup. At the same time, Fixed Asset Relief is an excellent entry-level package and value if your client doesn't need extensive import/export capabilities or some of the more advanced reporting features provided by more expensive software.
Bassets Fixed Asset System
Decision Support Software
At first glance, Bassets Fixed Asset System doesn't have the visual pizzazz that other vendors' products in this price range provide. The screens are attractive, but not dazzling, and some are not easily resizable. To be honest, we can't get too excited about this, as we tend to be more concerned with utility and usability than appearance. Bassets comes off very well in this regard. With the same basic design now seven years old, the software is mature and well-tested. The vendor's Web site lists some of the software's corporate users - you'll instantly recognize some of these names.
We tested the Bassets Fixed Asset System, which is the full-featured version of the software, with unlimited asset record capacity. For your smaller clients, a less expensive Bassets Lite version is available. It has very similar functionally to the version that we tested, but is limited to 1,000 records and does not offer any of the optional modules.
The high-end Bassets SQL is identical in features to the version we tested, but is based on Microsoft's SQL as the underlying database, which makes it very appropriate for client/server configurations, as well as improving performance with very large asset databases.
Additionally, Bassets offers a number of optional modules to extend the Fixed Asset Systems. These include 4-4-5 weeks/ 13-period accounting, construction in progress, expense allocation, foreign currency conversion, an enhanced general ledger interface, a lease asset tracker, units of production, accounts payable import, and bar code inventory control.
Some of these optional capabilities are standard on other high-end fixed asset applications. Others, such as the AP import and GL interface, are extensions of the import/export functions that are built into the standard software. These are actually pretty extensive, with import from Excel, ASCII files, and fixed-length or comma-delimited files. Since you can easily map the input fields, it's not difficult to pull in data from most accounting packages. Export formats include Excel, Lotus and ASCII, and all standard and custom reports can be exported in these formats.
Bassets provides 20 predefined reports and a report writer that lets you or your client create custom reports. These are usable, but they don't have the visual appeal that some other vendors' applications provide. All standard depreciation methods are supported, and you can create custom methods when necessary. Tabbed screens make it easy to switch between asset views, and you can attach an image to a particular asset, which is a nice feature also provided with several other high-end fixed asset systems.
Decision Support Technology informs us that they are in the process of finishing up a new fixed asset product, which should be available shortly after this roundup appears. The Version 4 release will be based on Microsoft .Net and will initially be available as a desktop application. A browser-based version is expected to be released in 2006. The new fixed asset application will supplement the current Bassets Fixed Asset System, not replace it.
BNA Fixed Assets Desktop Pro
While it is best known for its information reports rather than software, BNA is one of the major players when it comes to fixed asset applications. The BNA Fixed Assets is a mature product that's priced towards the higher end of the mid-range market, at least in the Desktop Pro version that we tested. There are also Server and Enterprise editions that are more expensive than the Desktop Pro edition, as well as Desktop and the entry-level Small Business Edition.
While there are some differences in features between the editions - more money means more features - the major differentiation is capacity. The Desktop Pro edition can have 10,000 assets, while the top-of-the-line Enterprise edition can handle up to 5 million assets. The SBE edition leaves off some features of the Desktop Pro, such as consolidations, mass additions, partial and mass dispositions, asset splits, and GL journal entry export, and limits the number of assets to 500. Still, for some of your small to midsized clients, SBE might be a very viable solution, and it's very easy to step up to more capable editions. There is also a Web-hosted version available as well.
All of the versions have pretty much the same calculation engine, and are able to handle all of the common depreciation methods and asset life determinations, as well as some of the more esoteric ones.
The application does not have a wizard to help you decide on a method or life, but does feature what BNA calls its "validation engine." This is a comprehensive database of relevant IRS rules and regulations, as well as other compliance documents from BNA's extensive pool. When you enter an asset, it is checked to determine that you are using a correct method and lifetime, and if not, the software suggests an alternative. Wizards are offered in other areas, including set-up, adding a new asset, and even disposing of an asset.
Import and export capabilities are also extensive. It's easy to import assets and data from other vendors' systems, including CSI's Depreciation Solution, CLR's GoSystem Fixed Assets, FAS FirstStep and Asset Accounting, and several other less popular applications. CSV format import is also supported, and you can export GL journal entries to make depreciation entries to many of the popular accounting packages.
Reports are extensive, comprehensive and very nicely designed. Filters let you fine-tune the data that you want to work with, and an optional Report Writer lets you create custom report templates for use with Crystal Reports. Reports can be printed or saved in several formats, including PDF, HTML or Excel format.
CCH ProSystem fx Fixed Assets
CCH Tax & Accounting
Offering suites of related products has become very common in the accounting software market. As with a number of other vendors included in this roundup, CCH has developed a full suite of tightly integrated products for use in an accounting practice. These include write-up, tax prep, practice management and the application under review, ProSystem fx Fixed Assets. Your clients can always run the application in a stand-alone mode at their premises, or even run it in-house and transmit the data to your office to flow into the other applications that you are using for the client.
Pricewise, ProSystem fx Fixed Assets is about in the middle of the pack. Featurewise, though, it gives little away to more expensive offerings. As with all of the applications we tested, you can expect all of the standard depreciation and timing methods, and it's not difficult to modify these if your client requires it. ProSystem fx Fixed Assets even provides the units of production method, something that several of the other vendors charge extra for. There is no wizard for choosing an asset class or life, but many users do not require a feature of this type. The software provides up to eight sets of books: the standard financial, tax, AMT, ACE and state books, as well as three user-defined ones.
As with many of the applications that we tested, ProSystem fx Fixed Assets adds a lot of customizability to its extensive set of reports. You can use sorts and filters to re-order and restructure data, and even add user-defined data fields to the standard ones provided by the software. You can also delete and re-order input fields to speed data entry.
Import and export capabilities are also very comprehensive. You can transfer data from most of the other popular fixed asset applications, and import and export data with Excel.
Available output in the PDF format lets you electronically distribute and easily save all reports. Unlike many vendors, CCH does not charge different prices for capacity increases. With ProSystem fx Fixed Assets, you can add as many assets as your computer's hard disk can handle.
Fixed Assets CS
Vendor Creative Solutions has changed the names of most of its applications. The former Depreciation Solution is now called Fixed Assets CS. Outside of the name change, the newly named Fixed Assets CS is pretty much the same system as it was under its old name. That's not a dig at the software, though. The Depreciation Solution, under any other name, still runs as nicely.
As with a number of the fixed asset applications we looked at for this roundup, the Fixed Assets CS system is a part of a complete set of accounting-oriented applications, something that Creative Solutions helped pioneer in the industry. As such, it can be used by the accounting firm to maintain multiple clients' asset and depreciation records, or installed at the client, with the data transmitted back to the accountant's office for integration with write-up and tax prep. This tight integration is a major benefit, since importing asset data from write-up and exporting depreciation and amortization figures to update other applications is pretty much automatic, and very fast.
In just about all respects, the Fixed Assets CS software holds its own against the competition very nicely. It incorporates all of the standard depreciation and timing convention methods, and you can create a custom method for the client if it's appropriate. Reports are attractive and comprehensive, with graphs and charts easy to generate and incorporate.
As with several of the fixed assets systems examined, you can include images of the asset, and generate a report on a specific asset with its asset record, along with depreciation schedules or other financial data. The optional Filing Cabinet CS allows you to store any output on disk or optical storage, and attach any scanned or generated worksheets, or even the bill of sale for acquisition or disposition to the asset record. You can also use the asset record's Image tab to attach images of these documents to the record.
Data entry is quick and easy, and the input fields can be customized to further speed this process, changing their sequence or even removing them from view. A Method/Life Wizard will suggest the method and life to use for an asset when the asset record is first created. You (or your client) can use the method and life as suggested, modify either of both, or ignore the suggestions completely. This wizard is not enabled by default, so it doesn't get in the way if it's not wanted.
Fixed Assets CS is priced in the mid-range, and there are really no options other than the previously mentioned Filing Cabinet CS. Some clients might want the ability to bar code assets, and will either have to look for a third-party solution or other fixed asset system that supports this feature. For most other clients, and many accounting practices, Fixed Assets CS will work just fine.
ProSeries/Fixed Asset Manager 2004
While some of the fixed asset applications that we tested are highly integrated with the vendor's other offerings, Intuit's ProSeries/Fixed Asset Manager is really designed to appeal to users of the vendor's ProSeries tax preparation applications. That doesn't mean that you can't use the ProSeries/Fixed Asset Manager with other vendors' applications. It has surprisingly good import and export capability, including direct import from FAS Fixed Assets and ProSeries tax products, and CSV and comma-delimited file import. You can export direct to ProSeries products or Microsoft Word, to Excel, or in ASCII, CSV or comma-delimited files. An easy-to-use wizard walks you through the field mapping process.
ProSeries/Fixed Asset Manager provides all of the usual depreciation methods, and you can create up to six asset bases - book, federal, state, AMT, ACE and custom. With 52 predefined reports, you should be able to find ones that suit your and your clients' needs, but the ability to export reports to Word for further customization, or for inclusion with the client's tax returns, is a nice thing to have available. A Report Wizard lets you use an included Report Editor to modify or create your own reports, which can include graphics.
The data entry fields are logically laid out and easy to use. You can paste existing asset data into new assets to further speed the process. The entry screens can also be customized, adding or deleting fields to customize the process for your client's circumstances. The on-screen asset summary is comprehensive and easy to use, though you might initially overlook the basis tabs on the bottom of the screen, which let you switch between the different sets of asset books.
Because the Fixed Asset Manager is so tightly tied to the ProSeries tax preparation products, it's issued yearly, rather than simply updated. An annual renewal costs $195 after you've made the initial purchase, and you essentially need to transfer assets and balances to each new tax year.
ProSeries/Fixed Asset Manager will run on a basic Pentium system, but Intuit recommends a Pentium 4 running at 1.3GHz or faster. An Internet connection is also required, and while you can use a 28.8K modem, high-speed broadband is also highly recommended.
The most likely purchasers of Fixed Asset Manager are accountants currently using ProSeries tax prep and their clients. It is very reasonably priced, does a good job, and works seamlessly with the tax products. You need to be aware, however, that the Fixed Asset Manager is not compatible with the ProSeries Express or Basic editions.
Sage FAS Asset Accounting V. 2005.1
It's not always easy figuring out where to physically place the FAS Fixed Asset software review in a roundup. The software is a mature and highly developed product, and has garnered a reputation over the years that's highly envied in the industry. It has also changed ownership several times. This most recent name change, from Best Software to Sage Software, doesn't reflect another change in ownership. Actually U.K.-based Sage Software has been the corporate owner for quite some time, but because of name ownership problems in the U.S., it has been forced to use the Best Software corporate umbrella until recently.
Sage's FAS Fixed Asset products are actually a family, with FAS Asset Accounting as the centerpiece. This is now bundled with the FAS Report Writer. The second product in the family is the FAS Asset Inventory, also bundled with the report writer. This application allows your client to physically track their asset inventory, using bar codes or just plain eyeballing. It supports PDAs for remote data tracking and use with inexpensive bar code readers. You can also buy a bundle or suite, which includes FAS Asset Accounting, FAS Asset Inventory and the FAS Report Writer. Prices for these put the FAS applications at the top of the mid-range market, though they are considerably less expensive than most enterprise-level solutions.
Finally, for those of your clients with more limited budgets, Sage offers FAS FirstStep. This is a less expensive version of the software, which still offers many of the features of FAS Asset Accounting, but has somewhat less capacity. FirstStep is also not bundled with the Report Writer.
With FAS Asset Accounting priced at the top of its market segment, you would expect it to also offer top-of-the-line capabilities. You won't be disappointed. While many of the applications we reviewed display four or five books on a screen, FAS Asset Accounting displays seven - internal, tax, ACE, AMT, state and two additional user-defined books. The internal calculation engine has over 30,000 IRS tax rules and generally accepted accounting principles-supported depreciation methods. Obviously, all standard depreciation methods are supported, and you can easily customize these for your clients' needs. The application does not include a wizard to help select the correct method or life, but does link to an electronic reference to help make these decisions.
Reporting features, even without the bundled report writer, are impressive, with a comprehensive collection of well-designed reports and filters that let you easily configure a report so that you can easily find the data that you are interested in. Graphics can be easily included with many of these reports to make it easier to understand the presented data. If you need more reporting capability, the bundled FAS Report Writer lets you quickly compose custom reports and ad hoc queries, and it will handle up to 999,999 assets in any single report.
Set-up and use of FAS Asset Accounting is no more difficult than any of the other applications we tested, with wizards that walk you through the set-up process. Data entry is quick, and you can streamline the process even more by moving or even deleting individual fields.
Ted Needleman, a former editor of Accounting Technology, is a consultant and freelance writer based in Stony Point, N.Y.
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