A quick look at the 'parent/child' fixed assets relationship

Nov 06 2012

Fixed assets can often be part of a 'parent/child' relationship.  This is a relationship where one or many fixed assets are dependent on another asset.  The dependent assets are set up as a ‘child’ and the asset it depends on is the ‘parent’.  For example with a computer and a software license installed on it, the computer is the ‘parent’ and the license assumes the role of ‘child.’    

The ability to link ‘ parent/child’ assets is key to establishing hierarchical relationships and dependencies among your fixed assets.   Once these relationships are set up it will be easier to accurately track and manage these connected assets.

For example, if you decide to transfer or dispose of the parent asset (such as the computer), you will want to know if there is a ‘child’ asset (the software licenses installed on that computer).  If you know of any child assets you will be able to transfer or dispose it with the parent asset, keeping the relationship intact.  Failure to properly link these assets when you set up your fixed asset register can lead to ghost or zombie assets come audit time.