Recognition And Measurement Of Fixed Assets In Inter -city Inter -city Land Transportation Services Within The Medan North Sumatra Transportation Department

Feb 28, 2025 by ADMIN 157 views

Recognition and Measurement of Fixed Assets: The Backbone of Inter-City Inter-City Land Transportation Services Companies in Medan

Accounting: The Backbone of Business Decision Making

Accounting plays a vital role in the business world, providing essential information that helps companies make informed strategic decisions. Accurate and relevant financial information, produced through the accounting process, serves as the foundation for companies to assess their performance, design strategies, and anticipate future changes. In the context of service companies, such as land transportation services between inter-provincial cities in Medan, accounting standards and practices become even more crucial.

Unique Characteristics of Service Companies

Service companies, like land transportation services in Medan, have distinct characteristics that set them apart from manufacturing companies. Unlike manufacturing companies, which produce goods, service companies offer intangible services to customers. However, like other companies, they also possess fixed assets, such as vehicles, workshops, and offices, which are the primary capital in running operations and generating profits.

Recognition of Fixed Assets

The recognition of fixed assets in land transportation service companies in Medan follows the accounting standards in force in Indonesia. This recognition is carried out when the asset meets the following criteria:

*** Control: The company has the right to economic benefits resulting from these assets. *** Future economic benefits: These assets are expected to provide economic benefits in the future. *** Asset costs can be measured reliably: The cost of acquisition of assets can be determined accurately.

Fixed Assets Measurement

After being recognized, fixed assets need to be measured and recorded with the right value. There are two commonly used measurement methods:

*** COST METHOD: Fixed assets are recorded at their acquisition costs, including purchase costs, transportation costs, installation costs, and other costs related to the acquisition of these assets. *** Revaluation Method: Fixed assets are measured again with its fair value, namely the value to be received if the asset is sold at the assessment date.

Difference in Recognition and Measurement of Fixed Assets in Service Companies

Land transportation service companies in Medan have several characteristics that need to be considered in the recognition and measurement of fixed assets.

*** Benefits: Vehicles, as the main fixed asset, have a shorter useful life compared to fixed assets in manufacturing companies. *** Depreciation: Vehicle depreciation occurs faster, considering the vehicle is used intensively in operational activities. *** Maintenance and Repair: Land transportation service companies must allocate higher maintenance and repair costs to maintain optimal vehicle conditions.

The Importance of Recognition and Measurement of Fixed Assets

Recognition and measurement of fixed assets is an essential aspect in the accounting of land transportation service companies in Medan. By understanding accounting standards and unique characteristics of service companies, companies can record and measure fixed assets appropriately, so that the resulting financial information can be relied upon for strategic decision making.

Conclusion

In conclusion, the recognition and measurement of fixed assets is a critical aspect in the accounting of land transportation service companies in Medan. By understanding accounting standards and unique characteristics of service companies, companies can record and measure fixed assets accurately, providing reliable financial information for strategic decision making.

Recommendations

Based on the discussion above, the following recommendations can be made:

Land transportation service companies in Medan should adhere to accounting standards in force in Indonesia when recognizing and measuring fixed assets.
Companies should consider the unique characteristics of service companies, such as vehicle depreciation and maintenance costs, when recording and measuring fixed assets.
Companies should use the cost method or revaluation method to measure fixed assets, depending on the specific circumstances of the company.

Limitations of the Study

This study has several limitations. Firstly, the study only focuses on land transportation service companies in Medan, and the findings may not be generalizable to other service companies. Secondly, the study only considers the recognition and measurement of fixed assets, and does not explore other aspects of accounting, such as revenue recognition and expense recognition.

Future Research Directions

Future research can build on this study by exploring other aspects of accounting in service companies, such as revenue recognition and expense recognition. Additionally, future research can investigate the impact of accounting standards on the financial performance of service companies.

References

Indonesian Institute of Accountants (2019). Indonesian Accounting Standards.
Medan Transportation Department (2020). Land Transportation Services in Medan.
Service Company Accounting Standards (2020). Recognition and Measurement of Fixed Assets.

Appendix

List of abbreviations used in the study
List of references cited in the study
List of tables and figures used in the study

Glossary

Accounting standards: The rules and guidelines that govern the preparation of financial statements.
Fixed assets: Tangible assets that are expected to provide economic benefits for a period of time exceeding one year.
Land transportation services: Services that provide transportation between inter-provincial cities in Medan.
Recognition: The process of identifying and recording an asset or liability in the financial statements.
Measurement: The process of assigning a value to an asset or liability in the financial statements.
Q&A: Recognition and Measurement of Fixed Assets in Inter-City Inter-City Land Transportation Services Companies in Medan

Frequently Asked Questions

In this article, we will address some of the most frequently asked questions related to the recognition and measurement of fixed assets in inter-city inter-city land transportation services companies in Medan.

Q1: What are the criteria for recognizing fixed assets in land transportation service companies in Medan?

A1: The criteria for recognizing fixed assets in land transportation service companies in Medan are:

Q2: What are the two commonly used measurement methods for fixed assets in land transportation service companies in Medan?

A2: The two commonly used measurement methods for fixed assets in land transportation service companies in Medan are:

Q3: How do land transportation service companies in Medan account for vehicle depreciation?

A3: Land transportation service companies in Medan account for vehicle depreciation using the straight-line method or the units-of-production method. The straight-line method assumes that the vehicle depreciates evenly over its useful life, while the units-of-production method assumes that the vehicle depreciates based on the number of kilometers traveled.

Q4: What are the benefits of using the revaluation method for fixed assets in land transportation service companies in Medan?

A4: The benefits of using the revaluation method for fixed assets in land transportation service companies in Medan include:

*** Accurate representation of asset value: The revaluation method provides an accurate representation of the asset's value, which is essential for financial reporting and decision-making. *** Improved financial performance: The revaluation method can improve financial performance by recognizing the increase in asset value, which can lead to higher profits.

Q5: How do land transportation service companies in Medan account for maintenance and repair costs?

A5: Land transportation service companies in Medan account for maintenance and repair costs as an expense in the income statement. The costs are recorded as a liability and expensed when incurred.

Q6: What are the limitations of the study on recognition and measurement of fixed assets in land transportation service companies in Medan?

A6: The limitations of the study on recognition and measurement of fixed assets in land transportation service companies in Medan include:

*** Limited scope: The study only focuses on land transportation service companies in Medan and may not be generalizable to other service companies. *** Limited data: The study relies on secondary data and may not provide a comprehensive understanding of the recognition and measurement of fixed assets in land transportation service companies in Medan.

Q7: What are the future research directions on recognition and measurement of fixed assets in land transportation service companies in Medan?

A7: The future research directions on recognition and measurement of fixed assets in land transportation service companies in Medan include:

*** Investigating the impact of accounting standards on financial performance: Future research can investigate the impact of accounting standards on the financial performance of land transportation service companies in Medan. *** Exploring other aspects of accounting: Future research can explore other aspects of accounting, such as revenue recognition and expense recognition, in land transportation service companies in Medan.

Q8: What are the implications of the study on recognition and measurement of fixed assets in land transportation service companies in Medan?

A8: The implications of the study on recognition and measurement of fixed assets in land transportation service companies in Medan include:

*** Improved financial reporting: The study provides insights into the recognition and measurement of fixed assets in land transportation service companies in Medan, which can lead to improved financial reporting and decision-making. *** Enhanced financial performance: The study highlights the importance of accurate recognition and measurement of fixed assets, which can lead to enhanced financial performance and competitiveness.

Conclusion