salvage value

A copy of the invoice is forwarded to the fixed asset department to record the asset details. Personnel determine the estimated life and salvage value by looking up the last similar asset purchase and using the previous estimated life and salvage value.

Required:

Describe any improvements you would suggest to strengthen the fixed asset internal controls at Crishner.

Expert Solution

There should be a more formal approval process that would include: identification of costs and benefits, a discounted cash flow analysis, a specific authorization from a high level manager.

There should be established expectations of return on investment that assets must be expected to achieve before purchase is approved.

A bid process should be established for assets of high value.

When practical, fixed assets should be delivered to the receiving department. This may not be possible for fixed assets such as those that must be installed at the user location.

Expected life and salvage values should be estimated for each asset instead of using the same values as the previous purchase.

Raffay answered 2 years ago

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