Fixed Asset Register Reconciliation: Matching PPE, Depreciation and the General Ledger
A fixed asset register should explain the movement in cost and accumulated depreciation. Reconcile both separately before relying on the closing net book value.
AI Summary
Scope: AS 10 book-accounting workflow; simplified FY 2025-26 example. Tax depreciation is a separate working. Verification date: 11 October 2026.
Do not begin with net book value alone
The PPE note may agree with the closing net asset figure while its gross cost and depreciation movements are incorrect. A disposal left in the cost column can be concealed by an incorrect depreciation adjustment. Reconcile cost and accumulated depreciation independently, then derive net book value.
Use the applicable book-accounting framework, including AS 10 where relevant. A register designed for income-tax blocks is not automatically a complete book fixed asset register. The two workings can share source records while using different calculation rules.
Collect the underlying asset records
For each asset, capture a unique ID, class, description, location, acquisition document, capitalised cost, date available for use, depreciation basis and disposal details. Link additions to invoices and approvals. Separate assets under construction from assets ready for use.
Review repairs and maintenance ledgers for items requiring a capitalisation assessment. Also inspect additions for routine expenses incorrectly capitalised. The size of the invoice or the ledger chosen by the accountant is not a substitute for the recognition assessment.
A worked cost and depreciation bridge
Assume opening gross cost is ₹50 lakh. Additions are ₹10 lakh and assets with original cost of ₹5 lakh are disposed of. Closing gross cost is ₹55 lakh. Opening accumulated depreciation is ₹20 lakh, the current-year charge is ₹6 lakh and ₹3 lakh of depreciation relates to disposed assets. Closing accumulated depreciation is ₹23 lakh.
| Movement | Gross cost ₹ lakh | Accumulated depreciation ₹ lakh |
|---|---|---|
| Opening | 50 | 20 |
| Additions / current-year charge | 10 | 6 |
| Disposals | (5) | (3) |
| Closing | 55 | 23 |
Closing net book value is ₹32 lakh. If disposal proceeds were ₹2.50 lakh, the disposed assets' carrying amount was ₹2 lakh, giving an illustrative gain of ₹0.50 lakh before any other relevant costs or adjustments. Agree the proceeds to supporting records rather than deriving them from the cost movement.
Investigate a depreciation mismatch
If the P&L shows ₹5.80 lakh but the approved register shows ₹6 lakh, investigate ₹20,000. Possible causes include an incorrect opening balance, a missed addition, different availability dates, a disposal not removed or an expense adjustment posted outside the register.
Reperform the calculation first. If the register is correct, document the necessary book adjustment. If the ledger is correct, repair the register. Do not force the note to match by adding an unexplained asset or changing useful lives without a defensible basis.
Keep the year-to-year bridge clean
Match current opening figures to last year's approved closing note, allowing for properly documented corrections. Where an asset class changes, retain a reclassification bridge. Maintain evidence for estimates and changes that affect the depreciation charge.
Review fully depreciated assets still in use, assets no longer in use and negative net values as separate exceptions. These situations may require different action; they are not all resolved by deleting the asset from the register.
Final financials checklist
- Agree class-wise opening and closing balances with the ledger.
- Trace additions and disposals to documents.
- Agree the P&L depreciation charge with the reviewed calculation.
- Reconcile asset-sale gains or losses and cash proceeds.
- Check the PPE note, comparatives, units and exported presentation.
When using assureOffice's Schedule 3 financial builder, compare the generated PPE note with the approved register. A difference should lead to investigation and an evidenced correction. Keeping this bridge clear makes later review and next-year preparation substantially easier.
Trace movements to individual assets
Use stable asset IDs so a renamed machine or relocated computer does not become a duplicate addition. For disposals, link the removed cost and accumulated depreciation to the same asset record. A sale-proceeds entry alone is not evidence that the asset has been removed correctly from the register.
Investigate idle assets, missing locations and assets with depreciation still running after disposal. The appropriate accounting conclusion depends on the framework and facts. Record the investigation and approved treatment rather than deleting a row to make totals agree. A clean asset population is as valuable as an accurate depreciation formula.
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- Tax Audit Depreciation Working: Reconciling Asset Blocks with the Fixed Asset Register
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