When an asset is recorded initially, an acquisition cost is entered along with the depreciation method and length of time to depreciate. The software will then calculate deprecation for all the assets. This amount is then used to create a journal entry to enter into the financial statements.

The location of the assets also is maintained. Asset tags are assigned to each asset and entered into the system. With every asset having an asset tag on it, and this same number in the system, it then becomes fairly easy to track the disposition of the assets.

Personal property taxes are calculated based on the value of assets, and the disposition of those assets. An asset that is non-productive and in a storage location will be taxed at a different rate than an asset that is actively being used in production. The fixed asset accounting software should allow for this type of information to be entered and reported. Often the location of the asset will be used to determine the assets disposition.

There are a few different fixed asset software choices. Often the MRP software system will have a module for fixed assets, but many companies find the fixed asset module to be too cumbersome and use separate software to maintain assets.

The main thing to consider for this type of software is the ease of use. It does not need to be integrated into the company's MRP software, since all fixed asset software should produce a simple report that can be used to create a monthly depreciation entry. This entry can then easily be input into the company's financial software. Often, stand alone fixed asset software systems will do a much better job of reporting the information needed to complete the personal property tax forms.