What Is an Asset Ledger?
An asset ledger is an accounting document for a company that only contains details about assets, rather than a general ledger that records all financial aspects of the company. To record different types of assets, an asset ledger typically contains subaccounts. While a company does not require this ledger, it does make accounting easier for a larger or more complex company. This ledger commonly has entries that bolster the company’s financial strength but, if an asset decreases in value, that depreciation also is recorded.
Most businesses are required to have a general ledger, which is made to record every financial dealing within the company; this includes any money coming in or going out and the changing of values. An asset ledger only details one aspect of financial dealings: assets. These are things that help give the company money, can be converted into cash or are used to get work done. Some common assets include property, money, stocks and bonds, tools and furniture.
One reason for using an asset ledger instead of just using a general ledger is that assets can be better managed. In a general ledger, assets are entered as general assets, with little or no distinguishing features. At the same time, stock assets and furniture assets will function, appreciate and depreciate much differently than each other. A subaccount will typically be made for each type of asset in the asset ledger, which usually makes monitoring and changing the assets easier.
The majority of businesses are not required to use an asset ledger, and they may not if this ledger is considered a waste of time. At the same time, this makes it easier to document assets in the general ledger, because most of the work that is required for assets can be taken care of in the asset ledger, and then documented in the general ledger. It also allows a specialized look into businesses’ assets and enables the general asset to provide just a broad look; this plays to both ledgers’ strengths.
Assets normally are obtained because they give the company more power or are worth money, but depreciation, or the decreasing value of assets, also is recorded in an asset ledger. While this decreases the value of assets, it does so for uncontrollable or realistic factors such as aging, lack of use or poor stock figures. Depreciation is a natural occurrence for assets, and the company has to acknowledge it in this ledger to get a comprehensive look at their value and financial power.
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