Non-current assets, fixed assets are the tangible assets of a franchise restaurant used in its business operations. Also known as Property, Plant, and Equipment, fixed assets have a useful life of greater than one reporting period. This means that they are expected to be used for more than one accounting period.
Used in the production of good and services to customers, fixed asset investments can range from a simple desktop computer to an entire warehouse or building facility where supplies are kept, or customers are serviced.
For most businesses—including franchise restaurants—fixed assets are a significant capital investment. Therefore, the following must be kept in mind when performing fixed asset accounting for franchise restaurants:
- Fixed assets are capitalized
- Record fixed assets at acquisition cost
- Expense fixed assets that cost lower than the threshold amount
- Additions increasing a fixed assets service potential should be capitalized
Above are some of the basic rules to keep in mind when performing fixed asset accounting for franchise restaurants. However, there are many more aspects of fixed asset accounting to consider and we will discuss them next.
Understanding Fixed Asset Accounting
As the name suggests, fixed assets cannot be consumed or sold in the current accounting year. Reported in the non-current or long-term asset section of the balance sheet, fixed assets comprise of the following general categories:
- Furniture and fixtures
- Computer equipment and software
- Leasehold improvements
- Intangible assets
Held for production, supply, rental, or administrative reasons—and not for resale—fixed assets are first recorded as assets, and then subjected to the general types of accounting transactions listed below:
- Amortization for intangible assets or periodic depreciation for tangible assets
- Disposition upon disposal of assets
- Impairment write-downs If an asset’s value falls below its net book value
Entered in financial records at its net book value, a fixed asset needs to fulfill the following basic criteria in order to be recognized as assets. These criteria, stated in the International Accounting Standards Board (IASB) framework, are as follows:
- Reliable measurements of the asset’s cost/value
- Probable economic benefits inflow to entity
By fulfilling these criteria, the fixed asset gets recognized in an entity’s financial statements.
In contrast to what the name suggests, a fixed asset can be a portable asset. This means that the asset can be shifted occasionally within a franchise restaurant’s premises or entirely off the premises.
For many franchise restaurant owners, fixed accounting for franchise restaurants can be complex. On the other hand, hiring a full-time accountant to do the job is a cost that you can easily do without. This is because today there are professional fixed asset accounting services that you can outsource to.
Why Outsource Fixed Asset Accounting for Franchise Restaurants
Outsourced fixed asset accounting services can provide you with accounting, reporting, and financial analysis services for all your fixed assets. If you don’t have the required expertise or a dedicated staff to do the job, outsourcing fixed asset accounting for your franchise restaurants to professional accounting services will get the job done accurately.
Even if you have the resources needed for the job, outsourcing fixed asset accounting will save you precious time and allow you and your employees to focus on your core expertise which is servicing your franchise restaurant customers.
At Global Shared Services, we have some of the best talent and software in the world for fixed asset accounting.
With us, you get high-performance, complete fixed asset accounting services that you can trust. These franchise accounting services are delivered by a team of experienced professionals and tailored to the needs of your restaurant business. Outsourcing your franchise restaurant’s fixed asset accounting to us will provide you with streamlined processes and the ability to scale through operational efficiencies.
Considering outsourcing fixed asset accounting for your franchise restaurant business? Let’s talk.
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With GSS, we meet our franchisor requirements on time and with accuracy. The local CPA could not handle our volume. We are so happy to have made the change. GSS knows our business and our franchisor requirements.Multi-unit fast sandwich Owner