From what has been said it is evident that the assets of a plant must be divided into groups for the sake of simplicity and convenience in keeping record of them. The basis of grouping should be physical similarity, process, or product. Thus, all tram cars might be carried in a group, as also all machines doing the same work or process. Groups of machines performing different processes on the same product could well be treated as a depreciation unit, and likewise all buildings used for the same purpose, if of a similar type of construction. If the latter are of different types it might be desirable to keep separate records. As stated above, the information desired must govern the groups under which record of behavior and performance are kept.
A numerical or an alphabetic numeric system of classification and identification is advantageous. Each machine, piece of equipment, or other asset should be marked or tagged when installed so that any particular piece of equipment can be identified at any time. The tag should carry date of installation and the name of the maker or vendor, as well as its own identification number. By the use of a combined alphabetical and decimal numerical system, almost any possible grouping can be made according to main and auxiliary groups, processes, or products.
Form of Plant Ledger
The form of the plant register or ledger need not be elaborate. Its main subdivisions should correspond with the subdivisions of plant and equipment carried on the general ledger. Thus, if we find therein accounts with buildings (factory, store, office, etc.), machinery, furniture and fixtures for factory, store, and office, delivery equipment, etc., subsidiary records should show corresponding subdivisions. It should be a matter of fixed policy to require a periodic proof of these subsidiary records against their respective controlling accounts on the general ledger. Only thus can the inclusion of all items in both records be made certain. The control established must cover both the items of the assets record—the original cost as shown by the asset account—and the accumulated depreciation as shown by the reserve account.
Asset Record
Aside from the title and classification and identification number, the plant register should provide a record of the asset under the heads of:
1. Date of installation or adjustment.
2. Estimate of life in periods, working hours, service output, etc.
3. Original value, including installation costs.
4. Periodic depreciation burden.