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Some are left at the customer like cables and lights while others are taken again like cars and computers.
Should it be fixed asset or inventory?
Costing concept may vary based on different purposes ( pricing, control, or decision making ). so for the cost of equipment and utilities i'll classify it as bellow:
- utilities& equipments related to generally running the business such as head office, transportation and administration. this cost should add to the business overhead as per business targeted plan. investment criteria,net present value, internal rate of return, economic feasibility analysis to be applied in order to maintain a healthy profit and making decision for which projects to be targeted or investing in assets.
- utilities& equipments assigned to a certain project such as mobilizations (usually included separately in work package or to be added as a project overhead or indirect cost)
- Utilities& equipments involved in the project/ projects operations ( in general and not assigned to certain project) should be treated as activity-based costing with cost driver based on labor hour, material consumption, or machine operation hour. cost driver will include depreciation as per balance sheet or business income statement, maintenance, fuel or energy consumption or any operating cost.
Some are left at the customer like cables and lights while others are taken again like cars and computers. What are left at customer as cables and light are charges and will be delivered at any time, however the cars and computers are assets for our balance sheet.
Should it be fixed asset or inventory? It should be fixed as inventory.
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