What is fixed asset reconciliation?

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Fixed asset reconciliation is the process of verifying that the fixed asset register — the detailed record of all physical and intangible assets owned by the business — agrees with the corresponding accounts in the general ledger, and that the depreciation calculations applied to those assets are correct.

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It is a balance sheet reconciliation activity and a core component of the period-end close process for any business with significant capital assets.

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What fixed asset reconciliation covers

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Asset additions. New assets purchased during the period are confirmed in both the asset register and the GL capital expenditure and asset accounts.

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Asset disposals. Assets sold, scrapped, or written off are confirmed as removed from both the asset register and the GL, with the correct gain or loss on disposal recorded.

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Depreciation. Depreciation charges calculated and posted for the period are agreed between the asset register's depreciation schedule and the GL depreciation expense and accumulated depreciation accounts.

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Asset revaluations. Where assets are revalued, the revaluation is confirmed in both the register and the GL with the correct treatment under the applicable accounting standard.

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Carrying value check. The net book value of each asset category — gross cost minus accumulated depreciation — is confirmed in both the register and the GL.

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Why it matters

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Fixed assets are often material balance sheet items. Misstated fixed assets inflate or deflate the balance sheet and affect profit (through incorrect depreciation). Auditors will test the fixed asset register as part of a standard audit, and any discrepancies will require explanation.

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Related: Balance sheet reconciliation · Account reconciliation · Journal entry · Financial close