Asset Management
What Are the Various Stages of the Fixed Asset Life Cycle?
August 14, 2019

What Are the Various Stages of the Fixed Asset Life Cycle?

What Are the Various Stages of the Fixed Asset Life Cycle?

In today's world, most organizations use a fixed asset to offer services to their clients and gain profit. But in the process of making a profit, we forget that a fixed asset has a life cycle too. It also has its limitation. So that is why Asset Lifecycle Management is important and, in this blog, you will discover a complete life cycle of a fixed asset. Before that, it's important to know what is the Asset life cycle?

A simple definition of Asset Lifecycle Management (ALM) is the process of optimizing the profit generated by your assets throughout their lifecycle.

Understanding the life cycle of an Asset is very important for the business. It is useful from the stage procuring until it disposed of.  E.g. a building has lots of valuable items which requires maintenance such as elevator, furniture, etc. The facility manager manages the assets.

Sometimes they need to be replaced and that is the responsibility of the manager. But Maintenance & repairing can increase the life & efficiency of an asset.

Now Here Are Stages of a Fixed Asset Life Cycle

1. Planning

This is the initial stage of an asset life cycle. In this stage, we plan for what is asset requirement? After assessing the existing assets. How are we going to implement it? Most importantly how it will influence our service. Will we meet our business needs? That is the basic planning phrase moreover it adds value to the company.

2. Acquisition/Procuring Asset

The acquisition is the second stage of an asset life cycle. Every organization has different strategies to acquire assets, for that planning is mandatory. Some organizations construct or build their assets such as using internal workers but how much part of the salary should be considered as an asset, that is the problem.

However, once the asset is procured, and installed as per the requirement, it is placed in the RPI (Real Property Inventory). Then, it is tracked through its useful life.  

3. Consumption & Depreciation

As time goes by, you use your asset and it loses its value. The organization takes benefit in tax deduction with the assistance of Depreciation.

4. The Operation, Repairing, and Maintenance

After the asset is used for some time then the asset requires maintenance to work efficiently. As we all know assets need maintenance on regular intervals otherwise it will not only burn a hole into your pocket, but your daily activities may also suffer.

If maintenance takes place regularly, your asset's lifespan will increase. Meanwhile, the asset manager should be focusing on how to improve or make adjustment in the operational requirement to enhance the potential.

5. Disposal

There comes a time when an asset is of no use to the company either because of inefficiency or any case. It needs to discard that asset.

The organization can give the asset in charity, sell it or exchange it for a more advanced & up-to-date model. At the point when an organization gives the asset, it needs to figure out how much that asset is worth in order to get the tax benefit.

Fixed Asset Life Cycle stages

But in the above-mentioned stages, there is a probability that asset might jump one stage for example if a new asset does not work efficiently or it has some defect that you will change it or maintenance manager will inform the status either it can be repaired, exchange or change completely.

What is the priority of the asset?

In some cases, asset takes more maintenance than usual. It not just wastes precious time but also decreases the productivity of the organization. In these types of cases disposing or selling the asset is the best option.

Here is another example, an organization gave you a work order & your organization wants to meet the demand, but the facility needs to upgrade the system to fulfill the supply or you need to buy another asset.


Fixed Asset life cycle is very crucial it lets you manage your valuable items effectively & add more useful life of an asset to your organization. However, it is important to have a asset management software & application that ensures proper upgrading, replacement, and disposal of an asset.

Overall, it optimizes the life cycle of the asset. An asset manager plays an important role in the life cycle of an asset. It directly affects supporting future planning & vision for the company. Not just this, with proper planning & data-driven information, can lead to effective decision-making to enhance the outcome.

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