Fixed asset with capax


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Fixed Asset with Capax

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Fixed asset with capax

  1. 1. CLASSIFICATION OF FIXED ASSETS Fixed Asset Tangible Tangible fixed assets include physical assets Intangible Assets that do not have a definite existence are called intangible assets. They have neither a physical form nor give their owner definite financial rights. manufacturing equipment, real estate, and furniture, Motor Car, Vehicles Patents, Copy Rights, Good Will
  2. 2. DEPRECIATION Causes of depreciation: Wearing out Using up or other reduction in the useful economic life of a tangible fixed asset whether arising From use, Effusion of time or obsolescence
  3. 3. FACTORS TO DETERMINE DEPRECIATION - the cost of the fixed asset; - the (estimated) useful life of the asset; - the (estimated) residual value of the asset - the method of depreciation
  4. 4. STRAIGHT LINE METHOD • It is simplest and most commonly used method • Calculation based on Purchase or acquisition price • Salvage value / Scrap Value / Residual Value divided by the total productive years • Till the end of life of asset, Depreciation will not vary and remains constant
  5. 5. FORMULA FOR STRAIGHT LINE METHOD (Purchase Price of Asset - Approximate Salvage Value) Estimated Useful Life of Asset
  6. 6. WRITTEN DOWN VALUE METHOD  Applicable to machines that have high rates of depreciation in the initial year or two, and later taper it e.g. a car, is a usable method.  Written-down value is also called book value or net book value. It is calculated by subtracting accumulated depreciation or amortization from the asset's original value.  Also called as diminishing balance method or Reducing Instalment Method. This accounting technique reduces the value of an asset by a set percentage each year
  7. 7. FORMULA FOR WRITTEN DOWN VALUE Rate of depreciation = 1-(salvage value/Cost of asset)^(1/n) n-> useful life of the asset. This rate of depreciation is charged on the net book value of the asset of each year.! The depreciation rates are high at the start and low towards the end of useful life of the asset
  8. 8. BOOKS OF DEPRECIATION Books of Depreciation Corporate book Tax Book Straight – Line method Written Down method Schedule 6
  9. 9. e.Chain Fixed Asset Management
  10. 10. e.Chain Fixed Asset Management e.Chain has the Feature of Tracking assets of business uses internally including but not limited to computers, tools, software, or office equipment. e.Chain allows companies to track the assets, where each is located, who has it, when it was checked out, when it is due for return, when it is scheduled for maintenance, and the cost and depreciation of each asset. e.Chain has the reporting option that is built into most asset tracking solutions provides pre-built reports, including assets by category and department, checkin/check-out, net book value of assets, assets past due, audit history, and transactions.
  11. 11. FIXED ASSET INTEGRATION WITH INVENTORY  Procurement of Capital Item will be is the part of Fixed Asset Register and it will be stage of CWIP and Capitalisation.  Assignment of Part Number (LOT / Serial) to specific Category of Asset Category.  Asset which is created will be defaulted in CWIP process which can be changed to capitalized for which the depreciation is to be calculated.
  12. 12. ASSET CATEGORY Asset Category
  13. 13. DEPRECIATION METHOD Definition of Method of Depreciation and its percentage also the statutory books.
  14. 14. DEPRECIATION TYPE WDV – Written Down Value - Depreciation percentage. SLM – Straight Line Method It is Sub divide d by two types as a. Percentage b. Life Period - Depreciation Percentage. - Depreciation Up to Max and either Life Period or Life months.
  15. 15. E.CHAIN DEPRECIATION Depreciation / day: (orginal cost – salvage cost) / ((life year * no.of days in a year) + life month * no.of the days in a month)) Maximum depreciation: (orginal cost – (orginal cost – accumulated depreciation )) * 100 / Original Cost > Max Depreciation Percentage
  16. 16. PRORATE CONVENTION Prorate convention is used to capture prorate date. Prorate date overwrites the date placed in service for depreciation calculation during the first year of asset's life.
  17. 17. ASSET Asset master form which contains the asset and the depreciation details
  18. 18. ASSET RETIREMENTS When an asset is considered retired, when it is permanently taken out of service, such as through sale or disposal. Retirement obligations can be done through this form.
  19. 19. DEPRECIATION REPORT Calculation of Depreciation can be done for Month / Year wise with the provision of Test Run and Final Run
  20. 20. DEPRECIATION REPORT The detailed report of the depreciation calculated for the assets.
  22. 22. Prepared & Presented By SIVAKUMAR.T.R Senior Project Manager Chain-Sys India Pvt Ltd., Chennai