ASSET MANAGEMENT/
MAINTENANCE OF ASSET
REGISTERS
Assets Register
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The maintenance of Assets Register of All the Public
Sector Undertakings is a statutorily requirement as
per Indian Company's Act 1956.
Assets Two Types
Current assets : Cash in hand, Amount receivable
from other organization, Bank Balance. (shown in the
Balance Sheet)
Fixed assets: Infrastructure of the company such as
Land, Building, Apparatus & Plants
Fixed assets
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Tangible assets: Tangible assets are those assets
having physical substance that can be seen and
touched like Buildings, Plant and machinery
Intangible Assets: Intangible assets are those
assets that are not having any physical substance but
however future economic benefits are expected to
flow from them to the enterprise viz. goodwill,
trademark, computer software, IPR, Patents
Company expenditure
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On the basis of nature of activities, the expenditure
incurred on behalf of company will either be
revenue expenditure or capital expenditure
The capital nature of expenditure is initially booked
under Inventory, Work in Progress or directly
under Fixed Asset
Fixed Asset - the depreciation on such assets starts
the date of booking under Fixed Asset .
if capital nature of expenditure is booked under WIP
or Inventory, the depreciation does not start till the
transfer of such expenditure to Fixed asset.
Consideration of Fixed Assets: Guidelines
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Capital Expenditure Items
Eg. Expenditure incurred for
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Installations Commissioned
Land and Buildings
Vehicles
Standby equipments
Addition and Alterations
Revenue Expenditure
Eg. Expenditure incurred for
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Shifting and re-installation of existing assets
Consideration of Fixed Assets: Guidelines
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Capital Expenditure Items
Expenditure on replacement of assets, equipments,
instruments and rehabilitation works can also be
capitalized, if in the opinion of the management, it
results enhancing the revenue earning capacity. For
this Management Certificate is required for
record.
Treatment of Work in Progress as Fixed Assets: For
capitalizing & taking into accounts as fixed assets,
“Management Certificate” will be issued by the
Management
Depreciation:
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Depreciation means a fall in the quality, quantity or
value of an asset
Causes of depreciation
Wear and tear due to actual use
b) Efflux of time- mere passage of time will cause a
fall in the value of an asset even if it is not used.
c) Obsolescence- a new invention or a permanent
change in demand may render the asset useless;
d) Accident; and
e) Fall in market price.
Depreciation:
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The fact to remember is that except in a few cases
( e.g. land and old paintings) all assets depreciate
Full depreciation is charged on Capital expenditure up
to Rs.5, 000/Income Tax Act, 1961 provides for 100 %
depreciation on those items of plant and machinery
whose actual cost does not exceed Rs. 5,000 each
MSTC (Metals and Scrap Trading Corporation).
Methods for Providing Depreciation
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In BSNL depreciation is provided on written down
value method. Under this method, the rate or
percentage of depreciation is fixed, but the first year,
depreciation is written off proportionate to the actual
period in use. The Depreciation on the Rs. 20,000the cost of the asset- at the rate of 10% will be Rs.
2000 in the first year. This will reduce the book value
of the asset to Rs. 18,000. Depreciation in the second
year will be Rs. 1800 i.e. 10% of Rs. 18000/-.
Rate of Depreciation in BSNL
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5%
13.91%
15.33%
18.10%
25.89%
40%
45.8%
Building
Lines & Wires, Installation Test
Equipments, Masts & Aerials, Office
Machinery & Equipment , Electrical Fitting
& Appliances
Apparatus & Plants, Cable
Furniture & Fixtures
Motor Vehicle & Launches
Computer
Subscriber Installations
Terminologies Associated with Assets
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Non Performing Assets: An asset which is
producing no income.
Obsolete Assets: The Asset which has outlived its
economic life, or due to change of technology it is
not useful to generate revenue
Unserviceable Assets: The asset which is not
useful for the department being beyond economic
repairs and as such is not useful for generating
revenue.
Surplus Assets: An asset may be treated as surplus
when the same is in excess of requirement for a
specified period.
Inventory
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Non Moving Inventory: If an item is lying in
stock/depots continuously for more than three years
without any issue.
Slow Moving Inventory: when only 10% to 15%
of the said items in stock are issued each year for a
period of 2 to 3 years continuously.
Questions ?
Thank You