Fixed asset terms, defined.

The continuous physical evidence layer between the ERP and the physical world. ARM verifies that assets recorded in the financial subledger actually exist at the location and in the condition the register claims, and feeds verified updates back into the subledger continuously — not once a year. SoloTruth ARM is the first purpose-built platform in this category.

Accounting Standards Codification 360 governs impairment testing for long-lived assets under U.S. GAAP. Step 1 compares the carrying value of an asset group to its undiscounted future cash flows. If carrying value exceeds cash flows, a Step 2 fair value measurement is required — a full appraisal exercise that is expensive and audit-intensive. Ghost assets inflate carrying values, causing asset groups to fail Step 1 tests they would otherwise pass.

The lowest level of identifiable cash flows used in ASC 360 impairment testing. Impairment is assessed at the asset group level, not for individual assets. A single ghost asset inflating the carrying value of its group can trigger a Step 2 impairment test for the entire group.

The process of matching physical asset reality to the financial records in a fixed asset register or ERP subledger. Reconciliation identifies discrepancies between what the system says exists and what actually exists on the floor, at a site, or in service.

A timestamped, traceable record of every action taken on an asset finding — from initial evidence capture through human review, approval or rejection, and final ERP update. SoloTruth ARM maintains a continuous audit trail so every subledger change is backed by a defensible evidence chain.

The net value of a fixed asset as recorded in the financial subledger: original acquisition cost minus accumulated depreciation. Also called carrying value. Book value is unreliable when the fixed asset register has not been reconciled against physical reality.

The net book value of a fixed asset — acquisition cost minus accumulated depreciation — as recorded in the ERP. Carrying value is the figure used in impairment testing under ASC 360 and IAS 36. Ghost assets inflate carrying value, creating false impairment risk and overstated balance sheet values.

The requirement under IAS 16 to depreciate significant components of a fixed asset separately when those components have different useful lives. A manufacturing line's motor and its structural frame must be tracked as distinct assets. When a component is replaced without a corresponding subledger update, the replaced component becomes a ghost, and the new component is expensed rather than capitalized.

A model in which fixed asset existence, location, and condition are verified on an ongoing basis — triggered by physical events — rather than during a scheduled annual count. Continuous verification eliminates the 11-month drift window created by annual physical audits.

The EU regulation requiring more than 50,000 companies globally to report detailed sustainability data under European Sustainability Reporting Standards (ESRS). ESRS E1 requires asset-level GPS coordinates at NUTS Level 3 precision for climate risk disclosure. ESRS E5 requires circular economy asset tracking. Neither requirement can be satisfied from a static ERP fixed asset register.

The gradual divergence between what an ERP fixed asset register records and what physically exists. Data drift accumulates continuously as assets are moved, retired, replaced, or added without corresponding journal entries. Annual physical counts reset drift temporarily; continuous verification eliminates it.

The removal of a fixed asset from the financial statements. Under IAS 16 and ASC 360, an asset must be derecognized when it is disposed of, retired, or when no future economic benefits are expected from its use. Failure to derecognize creates ghost assets — assets that continue to depreciate on the books after they no longer exist.

Software category covering maintenance work orders, asset health, and operational uptime (examples: IBM Maximo, SAP Plant Maintenance). EAM optimizes operational performance but does not reconcile physical asset existence against the financial subledger. SoloTruth ARM sits above EAM — it governs what happens between a physical finding and the financial record update.

Enterprise software platforms (SAP, Oracle, Microsoft Dynamics, TOTVS) that manage financial records, supply chain, and operations. ERP fixed asset modules record the financial lifecycle of assets accurately — but they were never designed to verify that the assets physically exist. ERP records what it's told; it cannot detect physical changes that go unreported.

SoloTruth's term for the capability that sits between physical asset reality and the financial system of record. The evidence layer captures multi-source physical data (inspections, RFID, GPS, documents), routes it through governed workflows, and writes verified results to the ERP — replacing the assumption that journal entries will be filed manually.

The detailed record within an ERP or fixed asset system that tracks individual assets: acquisition cost, useful life, depreciation method, carrying value, location, and retirement history. The FAR feeds the general ledger. Its accuracy depends entirely on the journal entries it receives. Without a verification layer, the FAR reflects what organizations believe they own — not what they can prove they own.

The SAP module that manages the fixed asset subledger. FI-AA handles acquisition cost, depreciation, and retirement — but it is a separate module from SAP Plant Maintenance (PM) and does not receive automatic updates when physical changes occur on the floor. This module silo is a design constraint, not a configuration problem.

A fixed asset that remains on the ERP register and continues to depreciate, generate insurance premiums, and appear in audit samples — but no longer physically exists. Industry data (Kroll Advisory) shows 10–30% of enterprise asset registers contain ghost assets. The financial exposure includes phantom depreciation, property tax overpayments, insurance premiums on non-existent assets, and false impairment test triggers.

A structured process that routes a finding or exception to the correct reviewer, requires a human decision at defined points, and logs every action before a system-of-record update is executed. SoloTruth ARM uses governed workflows to ensure no asset register change is made without evidence, accountability, and a traceable approval chain.

Location tracking technology used to capture outdoor and large-facility asset positions. In fixed asset verification, GPS provides the physical location evidence required by CSRD ESRS E1 (NUTS Level 3 coordinates) and confirms that assets are located where the register claims.

A governance model in which a qualified human reviews and approves automated findings before they trigger system-of-record updates. In SoloTruth ARM, human-in-the-loop control applies to every financially material asset finding — automation routes and proposes, humans decide and approve.

The IFRS standard governing property, plant, and equipment. IAS 16 requires component accounting — significant components with different useful lives must be depreciated separately. It also governs initial recognition, revaluation, and derecognition of fixed assets. Most organizations using SAP FI-AA carry a structural gap between IAS 16 requirements and what the ERP actually captures.

AI-powered extraction, classification, and interpretation of unstructured documents — invoices, bills of materials, maintenance records, purchase orders. In fixed asset management, IDP automatically extracts asset attributes from source documents and feeds them into the reconciliation workflow, eliminating manual data entry.

The process of determining whether a long-lived asset's carrying value exceeds its recoverable amount (IFRS/IAS 36) or undiscounted future cash flows (U.S. GAAP/ASC 360). Ghost assets inflate carrying values and can trigger impairment tests — and full Step 2 fair value measurements — on asset groups that would otherwise pass.

The structural requirement in every major ERP that physical asset changes — retirements, relocations, component replacements — must be reflected in the register through manually filed journal entries. The people who observe physical changes (maintenance crews, plant floor staff) are rarely the people who file accounting entries. This gap is where register drift originates.

The design constraint in SAP, Oracle, and Microsoft Dynamics where the physical tracking module (Plant Maintenance, Inventory Management) and the fixed asset financial subledger are not natively integrated. Physical changes captured in one module do not automatically update the other. This is not a configuration problem — it is a design constraint that applies to every major ERP platform.

The U.S. regulator that oversees audits of public companies. PCAOB publishes annual audit deficiency rates — the percentage of audits where inspectors found significant failures. Long-lived asset audit deficiencies doubled from 2022 to 2024, while overall rates improved. Organizations that cannot demonstrate physical verification of their asset register face increasing audit risk.

Depreciation charges posted to the income statement for assets that no longer physically exist. Phantom depreciation is the most direct financial cost of ghost assets — it overstates expenses, understates net income, and inflates carrying values on the balance sheet.

The process of confirming that a fixed asset physically exists at the location the register claims, in the condition the carrying value assumes, with the components the depreciation schedule depends on. Physical verification is distinct from ERP record-keeping: the ERP records what it was told; physical verification confirms whether that information is accurate.

Asset tagging technology that uses radio waves to identify and locate tagged assets without line-of-sight scanning. RFID readers can inventory large numbers of assets quickly. In fixed asset verification, RFID provides location and existence evidence that feeds the reconciliation workflow.

The transition from SAP ECC (the legacy ERP platform) to SAP S/4HANA (the current generation). Approximately 17,000 SAP customers are currently in this migration. Ghost assets in the legacy register migrate into the new system, compounding data quality problems at significant cost. Pre-migration physical verification is the most cost-effective point to clean the register.

U.S. federal legislation requiring public companies to maintain effective internal controls over financial reporting. Fixed asset subledger accuracy is a SOX control. Ghost assets and unreconciled registers create control deficiency findings that require remediation and can escalate to material weaknesses.

The detailed subsidiary ledger within an ERP that tracks individual asset records and feeds aggregate balances to the general ledger. The fixed asset subledger is the source of depreciation charges, impairment test inputs, and audit schedules. Its accuracy depends entirely on the transactions it receives.

Gartner's emerging technology category for the AI-era control plane that coordinates AI agents, RPA bots, APIs, and human workflows in a single governed process. Gartner projects 90% enterprise adoption by 2029. SoloTruth ARM is built on Axon Ivy's Universal Orchestration engine — the platform that routes asset findings through human-in-the-loop workflows and writes verified data to ERP systems.

The estimated period over which a fixed asset is expected to generate economic benefits — the basis for the depreciation schedule. Incorrect useful lives (too short or too long) are a common cause of register inaccuracy. Component replacements that go unrecorded create useful-life errors that compound over time.

SoloTruth's inspection management platform for regulated lenders and compliance teams. SoloTruth VirtuSpect captures geo-tagged, timestamped, image-authenticated field evidence and routes it through governed review workflows — producing a complete audit trail from assignment through resolution. In production at SBA and commercial lenders since 2024.

An asset that is physically present and in use but has not been added to the fixed asset register. The inverse of a ghost asset. Zombie assets are not depreciated, not insured at correct values, not included in maintenance programs, and invisible to auditors. Organizations often discover them during physical counts or ERP migrations.