What is a Production Asset?
A production asset is any item purchased, or manufactured, during the course of a production which will have a residual value and may be available for sale once no longer required by the production. These will generally be included within expenditure incurred by, but not limited to, the props, sets, costumes, art, production and accounting departments. Agreement should be reached in pre-production for a minimum level of net cost to constitute an asset e.g. a value for a single item of £250 net of VAT or desirable items costing less than this amount. Desirable items are items which have a desirable value (i.e. laptop, satellite navigation system, digital camera, printer, scanner etc). These items should be recorded on a production asset register. Particular attention should be made for the security of these assets.
A production asset is not necessarily the same as a fixed asset. Fixed assets are assets that have a life of longer than one year, so they are capitalised in the balance sheet and the cost of which is spread across its useful economic life. A production asset may be a fixed asset, but it could also be an item which can be written off in the year of purchase, but still has a value to the production and needs monitoring for that reason.
Who is responsible for the assets and for maintaining the register?
Responsibility for the safeguarding and storage of the assets throughout the production period initially rests with the relevant head of department although they may depend on production to ensure that adequate facilities are made available for them to do so. Maintaining the register is a production accounting responsibility.
Recording the asset in the register
When entering the source document (Invoice/Petty Cash Voucher etc) into the cost accounting system in the normal way, be sure that the ‘asseted’ item is clearly detailed and identifiable. This may be done by using a ‘free field’ if the accounting software allows. It is also advisable to keep a spreadsheet record of all asset entries, plus copies of the source documents, in a separate file. An example asset register is provided, however, some production funding organisations and employers will have their own spreadsheet formats that they would expect to be used.
Updating the register
All Heads of Department should receive regularly updated individual departmental lists detailing the assets they are responsible for. This ensures that items that have been sold, lost or damaged beyond repair have been properly reported and documented and then removed from the register. These regular updates also provide the opportunity of establishing a value on items that have been manufactured ‘in house’ in order that they can be added to the register if appropriate to do so.
Disposal of assets
Decisions as to what is to be sold, retained, gifted to individuals, donated to charity or transferred to another production should be taken at a senior production management level. They should determine the percentage of the original cost to be applied to items for resale. Where assets are sold, detailed sales invoices/receipts (with VAT at the prevailing rate) must be issued and, with limited exceptions (e.g. auctions etc), and the assets not released until full payment has been received. It is important that, whatever means of disposal apply to individual assets; it should be clearly documented, filed and reflected on the register.
On disposal of assets (whether recorded assets or other production assets) the transaction must be at arm’s length, at open market value and fully recorded on the asset register for audit purposes.
It is the responsibility of the production to make sure any goods supplied to others are safe and comply with relevant safety regulations. Anyone injured by unsafe goods may be able to claim compensation. Some assets may have a health and safety risk and it should be considered whether it is safe to sell/dispose of an asset. See below for general advice on inherent risky assets
- Electrical appliances
The safety of all electrical appliances designed to operate using the mains is controlled by the Electrical Equipment (Safety) Regulations 1994. All second-hand electrical equipment supplied or offered for supply must be safe. These include, for example, electric fires and heaters, electric blankets, hair dryers, cookers, fridges, washing machines, vacuum cleaners, lamps, computers and CD/DVD players. Any electrical equipment must have a Portable Appliance Test by a competent engineer and be accompanied with enough information to be used safely (hazard labels, manufacturer’s instructions etc).
- Gas appliances, gas fires and electric heaters
These appliances must meet a wide range of safety requirements before being offered or sold.
- Upholstered furniture
Most upholstered furniture (e.g. sofas, chairs, beds, bean bags etc) must comply with the Furniture & Furnishings (Fire) (Safety) Regulations 1988. Items manufactured after 1990 should have a permanent label with the words ‘Carelessness Causes Fire’. Furniture manufactured prior to 1990 is unlikely to comply with these regulations and therefore should not be supplied.
- Glass furniture
Glass used in items of furniture such as coffee tables and wall cabinets should be safety glass. i.e. toughened or laminated to prevent injury on impact. Glass which complies is usually marked with a BS number and kite mark. If in any doubt do not supply or offer to supply the item.
Any toy which is supplied either new or second-hand must comply with a set of ‘essential safety requirements’. These briefly cover; physical and mechanical properties, (e.g. loose facial feature, sharp edges, finger trapping hazards), flammability, electrical properties (e.g. toys must not operate at a voltage exceeding 24V), hygiene (toys must not present a risk of infection). Children frequently put toys in their mouths; ensure that all toys are clean and where possible washed prior to supply or offering for supply.
- Prams & pushchairs
All prams and pushchairs, whether new or second-hand, must comply with British Standard 7409:1996 or BS EN 1888:200 or an equivalent European Standard. Look for the label stating that the pram or pushchair complies with this Standard or its equivalent. These labels are usually found on the frame or seat covering. If no label exists then it may be difficult to establish whether the item complies with the Standard. If the pram/pushchair has been damaged or modified it may no longer meet the requirements of the Standard. The pram/pushchair must also comply with the Furniture Furnishing (Fire) (Safety) Regulations 1988 (as above).
Receipts must be provided to the purchaser for any assets bought.