What are Ghost Assets?

What happens when things like tablets or computers in companies get old? Old company stuff is included in the fixed asset ledger but not used. The reason for this situation is "Ghost Asset". Ghost assets can be found in all types of businesses from micro to large. In fact, 49% of small businesses admit they have no idea about Ghost Asset because they do not know how the financial situation is affected by using manual asset management. It is also a result of manual asset management. That is why a company needs to avoid Ghost Assets.

What Are Ghost Assets?

Ghost Assets are assets that are not physically present or used but are kept in the organization’s asset record. Commonly, Ghost Asset either do not exist in the company or are problematic assets such as broken or lost. These assets apply to businesses of all sizes because businesses continue to pay taxes on every non-existent or unused asset.

Financial situations such as taxes and insurance in the business change due to the phantom entity and due to inadequate accounting processes, it changes the profit rate of the business significantly. Therefore, avoiding Ghost Assets are crucial for a company to stay afloat. Fixed assets donated or unused become Ghost Assets unless asset tracking measures are taken. The accounting cost caused by Ghost Assets can also be high. Examples of these are as follows.

• Increased tax payments
• Increased insurance premium
• Wrong estimate of capital expenditures
• Incorrect fixed asset reporting

What are the Impacts of Ghost Assets?

• Increased Tax Liability: Business inventory is taxable. Due to assets recorded in the accounting ledger but not physically present, the tax payment increases.
• Wrong Financial Statements: The financial statement of the company may be inaccurate due to Ghost Assets. Therefore, the company can get into a difficult situation.
• Decreased Productivity: Ghost Assets negatively affect not only effectiveness but also productivity. For example, an asset marked as available cannot perform its employee task because it does not physically exist.
• There are solutions to track and eliminate Ghost Assets.

How to Eliminate Ghost Assets?

Here are some ways to eliminate Ghost Asset:

• Physically Audit: Companies should compare assets in their accounting ledger with physical assets.
• Determining Ghost Assets: After the audit, the Ghost Assets are determined and dominance over the assets is ensured.
• Keeping Track of Assets: Identifying Ghost Assets cannot be enough. That is why using effective IT Asset Management Software is the definitive solution. The life cycle of assets is monitored and controlled. Therefore, that the right source of information about the assets is reached with Asset Management Software. With this planning, the process from the beginning of an asset’s life to it is disposal is determined.