What is a ghost asset?
A “ghost” asset is a fixed asset on a general ledger that cannot be accounted for because it is not physically present or has been rendered unusable.
Let’s ignore the ethics of how Dracula acquires so many properties. The point is he sells them off so quickly Igor sometimes forgets to remove them from the general ledger. These are ghost assets, and Dracula is getting taxed on them.
What is a zombie asset?
A “zombie” asset is an asset that exists physically but is not recorded in any accounting records.
Frankenstein is always on the lookout for good spare parts in case one of his toes wears out or one of his arms begins to sag. He tries to keep accurate records on which parts he has discarded, which he has in inventory, and which he is currently using. But he’s not much of a record keeper. He recently forgot to account for the very hand he was using to do his accounting, a hand that is now a zombie asset.
Why are these types of assets so scary?
Essentially, they threaten the two things you never want in the finance world: lost money and risk. If you’re paying taxes on missing, unusable, or stolen assets, then you’re throwing money away. And conversely, if you’re not paying taxes on items you definitely own – you’re opening the company up for risk.
How can you ward off zombie and ghost assets?
The good news is there’s a potent solution that can prevent ghost and zombie assets from haunting your books: integrate asset tracking into your procurement process. An asset management solution tracks assets and related spending so organizations can:
- Log the location and condition of assets
- Forecast large expenses
- Determine when assets will be retired and new items expensed
- Properly depreciate assets on the balance sheet
- Track work orders against warranties and service contracts
- Buy smarter in the future.
This means you can prevent those pesky ghosts from hanging around and zombies from popping up. You can also:
- Automatically calculate asset depreciation based on a number of depreciation methods
- Budget more effectively using asset performance and cost data
- Avoid costly breakdowns and prevent overpaying for services by tracking warranties and services alongside purchasing
- Buy smarter in the future with visibility into all assets’ historical, current, and projected utilization and performance.
Ultimately, you get peace of mind, prevent loss, and save time that can be focused on strategic planning and analysis.
Ready to learn more?
Don’t live in fear – let Basware help you take automation further with integrated asset tracking. Who you gonna call? Basware!