E2-E3

MANAGEMENT
Maintenance of Asset Register

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 WELCOME
• This is a presentation for the E2-E3 Management
Module for the Topic: Maintenance of Asset
Register
• Eligibility: Those who have got the Upgradation
to from E2 to E3.
• This presentation is last updated on 15-3-2011.
• You can also visit the Digital library of BSNL to
see this topic.

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 AGENDA

•Classification of Assets
•Maintenance of Asset registers
•Physical verification of Assets
•Decommissioning of Assets
•Depreciation , Factors causing depreciation

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 Classification of Assets
As per accounting term assets are of two types- one is current
assets and other is fixed assets. Current assets which are
shown in the Balance Sheet e.g. Cash in hand, Amount
receivable from other organization, Bank Balance etc.
whereas fixed assets are infrastructure of the company such
as Land, Building, Apparatus & Plants, Computers, Office
Machinery and equipments etc are the examples of Fixed
Assets. Fixed assets are further classified under the following
categories:

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 Classification of Assets

Tangible Assets: Tangible assets are those assets having

physical substance that can be seen and touched like
Buildings, Plant and machinery etc..These are governed by
Accounting Standard 10.
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,
patents etc.

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 Maintenance of Asset registers
The 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. Assets costing upto Rs. 5,000/-
purchased during a financial year, 100% depreciation must be
provided in the year of purchase of such type of assets. All
such assets may also be shown in asset register and
accounts also.

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Physical Verification of Fixed Asset :
However, where the assets are numerous and difficult to
verify (e.g. cable, L&W etc.) a verification, say once in
every 3 years by rotation, so that all assets are verified at
least once in every 3 years may be sufficient. As regards
physical verification data, One hard &soft copy of the data
regarding physical verification of asset, CWIP & inventory
in prescribed formats shall be kept at the HQ of SSA / Unit
level to whom these items belong. One soft copy of the
same shall be kept at Circle HQ for the purpose of audit.

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Physical Verification of Fixed Asset :

It is the responsibility of the Management (GMs/TDMs) to have

the physical verifications of Fixed Assets got done by the
officers of competence at appropriate intervals in order to
ensure that they are in existence. The Auditor is to satisfy
about this and will record this fact in his report. Where the
assets are few and can be easily verified (e.g. vehicles, land &
building etc.) an annual verification may be considered
reasonable.

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 Decommissioning of Assets:
Whenever the asset is de-commissioned, the fixed asset and
the accumulated depreciation is to be relieved to that extent
and the same may be transferred to Decommissioned Asset
under Inventory schedule and remain there till they are finally
disposed off. Provision for loss may also be made in the
accounts if any. Whenever the de-commissioned asset are
finally disposed off, if the sale proceeds is more than the
depreciated value or Net Realisable Value (NRV) it will be
treated as Income and if otherwise it will be a loss and
accordingly entries will be made in the accounts.
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 Depreciation:

Depreciation means a fall in the quality, quantity

or value of an asset. The net result of an asset’s
depreciation is that sooner or later the asset will
become useless. The factors that cause
depreciation are:

a) Wear and tear due to actual use

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 Depreciation:

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

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 Depreciation:

The fact to remember is that except in a few

cases ( e.g. land and old paintings) all assets
depreciate. Though current assets may also loose
value, the term depreciation is used only in
respect of fixed assets and is usually confined to
the fall in value caused by factors (a) and (2)
mentioned above.

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Methods for Providing Depreciation:
There are various methods for providing depreciation. 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. 20,000- the
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.

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 Rate of Depreciation in BSNL:
It may be kept in mind that depreciation is provided only on
Fixed assets and no depreciation is to be provided on other
assets such as WIP, Inventory, decommissioned Assets and
so on. Depreciation is provided on BSNL’s assets at the
following rates:
1. Building = 5%
2. Apparatus & Plants = 15.33%
3. Motor Vehicle & Launches = 25.89%
4. Subscriber Installation = 45.8%

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 Rate of Depreciation in BSNL
5. Cable = 15.33%
6. Lines & Wires = 13.91%
7. Installation Test Equipment = 13.91%
8. Masts & Aerials = 13.91 %
9. Office Machinery & Equipment = 13.91%
10. Electrical Fitting & Appliances = 13.91%
11. Furniture & Fixtures = 18.10%

12. Computer = 40%

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For internal circulation of BSNL only