Internal controls is an accounting system to aid in proper reporting of existing assets and liabilities. Internal controls over fixed assets alleviate two distinct risks. The primary risk is physical in nature and relates to the asset getting lost, stolen or damaged thereby affecting the value as reported on the financial statements. The second risk is financial in nature related to errors in determining cost basis, useful life, and depreciation assigned; all of which can affect value.
A fixed asset term identifying actual purchase price, delivery cost, set-up and installation and final testing with the corresponding training of employees. The combined costs are referred to as acquisition cost in business.