Fixed assets and inventory
Fixed asset and inventory checklist
Fixed assets and inventory change the balance sheet, the depreciation schedule and the cost of goods sold, and the support often arrives after the books are ready to close. This checklist covers what to collect at year end: the invoices for assets bought, the records for assets sold or retired, the prior depreciation schedule, and the inventory count and valuation. Start it before the last month of the year.
Who sends itSent by the bookkeeper or tax preparer to each business client before the year-end close, especially a client that buys equipment, owns vehicles or carries inventory.
0 of 22 ticked
01Fixed asset additions
02Disposals and changes
03Depreciation records
04Inventory
05Year-end review
What firms get wrong
- Waiting until the return is being prepared to ask for asset invoices, when the client has already filed the paperwork away.
- Expensing an asset that should be capitalized, or capitalizing a repair that should be deducted.
- Missing the date an asset was placed in service, which changes the first-year depreciation.
- Treating a trade-in as a sale without the new asset's cost and the trade-in allowance.
- Using a year-end inventory estimate without saying how it was calculated.
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Questions about this checklist
What counts as a fixed asset?
A fixed asset is property the business uses for more than one year, such as equipment, vehicles, furniture, computers or leasehold improvements. The firm's capitalization policy sets the dollar threshold.
What records are needed for a fixed asset?
Keep the purchase invoice, the date the asset was placed in service, the cost including sales tax and installation, and the prior depreciation schedule. For a vehicle, keep the business-use percentage and mileage log.
How should inventory be valued at year end?
Use the method the business has been using, such as FIFO, LIFO or average cost, and apply it consistently. The count should be taken as close to year end as possible and the valuation should be at cost.
What is the difference between a repair and an improvement?
A repair keeps the asset in its current condition, such as fixing a leak. An improvement adds value or extends the asset's life, such as a new roof or an engine replacement, and is generally capitalized and depreciated.
What if the client did not take an inventory count?
Ask for the closest count or a reconstruction from purchases and sales. If the inventory is material, the firm should explain the estimate on the return and consider whether a physical count is needed before filing.
Sources
Checked November 3, 2026. Tax rules, forms and thresholds change; confirm them with the IRS or your tax software before relying on them.
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