Role of pant assets in RFL Ltd
Term paper
Under the guidance of and super visor of
MD.
Shamsur Rahman
Assistant
professor,
Department
of Accounting
Govt.M.M. College,
jessore
Submitted by
Name:
Samapti Biswas
Calss Roll: 159, NU Roll: 8012667
Nv Reg: 2015194, Session:
2011-2012
BBA(Hon’s) second
year
Department of
Accounting
Govt.M.M. College, jessore
In partial
fulfillment of the requirement for the degree of BBA January -2014.
Date: 15 september
2014-12-05
Letter of
transmittal
Date: 15 september
2014-12-05
md. Shamsur rahman
Lecturer,
Department of Accounting
Govt.m.m. college,
jessore.
Sub: submission of
term paper.
Dear sir,
It is a great pleasure and privilege to present the term paper tilled “Role of pant assets in RFL Ltd” which was assigned to me as a partial requirement for the competition of BBA (Hon’s).
Throughout the
study I tried with the best capacity to accommodate as information and relevant
issues possible and tried to follow the instructions as you have suggested. I
tried my best to make this report as much informative as possible. I
sincerely believe that it will satisfy
your requirement. I however sincerely believe that this report will serve the
purpose of my term paper of BBA (Hon’s).
my effort will be
reworded only if it adds value to the research literature.
Your truly
Name:
Samapti Biswas
Calss Roll: 159,
NU Roll: 8012667
NU Reg: 2015194,
Session: 2011-2012
BBA(Hon’s) second
year
Department of
Accounting
Govt.M.M. College,
jessore
Students Declaration
I here by
declare that the report of term paper namely “Role of plant assets in RFL Ltd.”
by me after the completing inspection with RFL Ltd . at Rangpur and a
comprehensive study of the existing activities of RFL Ltd. and its
implementation.
I also
declare that this paper is my original worked and prepared for academic purpose
which is a plant of BBA and the paper may not be use actual market scenario.
Your truly
Name:
Samapti Biswas
Calss Roll: 159,
NU Roll: 8012667
NU Reg: 2015194,
Session: 2011-2012
BBA(Hon’s) second
year
Department of
Accounting
Govt.M.M. College,
jessore
.
Supervisor’s Declaration
I here by
declare that the concerned report entitled “Role of plant assets in RFL Ltd “is
an original work by a students of BBA (Hon’s) . department of accounting , Govt.m.m.
college, jessore has term paper under my administration (BBA) at Govt .m.m
college jessore.
Md.
Shamsur Rahman
Lecture, Department
of accounting
Govt.m.
college jessore.
Acknowledgment
The report titled as “Role of plant assets in “RFL Ltd” has
been prepared to fulfill the requirements of BBA(Hon’s) degree. i am very much
fortunate that i have received sincere guidance, supervision and co-operation
from various respected people while preparing this report. Many people helped
me to preparing this report. First of all I would like to thanks my academic
supervision of the internship program- Md. shamsur Rahaman Lecturer
of Govt.m.m. college jessore for giving me the
opportunity to prepare this report. He also provided me to important advices
and guidance for preparing this report. without his assistance this report
would not be a comprehensive one. secondly I would like to thank department of
accounting of Govt.m.m. college jessore , where i received support of requirements of finishing the internship program and daily
updates of college.
Finally, I would like ro thank the authors of
the books that I’ve taken help from which had mad my understanding report .
Executive Summary
Business
education should have the focus on the real world where things sometimes go beyond the boundary of
theoretical concepts as per the demand of the situation. Here lies the
important of the term paper, which facilities to test the preference of the
theoretical knowledge in the application of practical field. Here that can
focus on the activities of RFL ltd. That deals with how the company takes it
plant asset.
This
report has been prepared as required term of the internship program. This
report also described the action of accounting department. When the assets are
changed in any manner This report is prepared on the basis of my 7 weeks
practical experience at ‘RFl ltd’. The internship program helped me a lot to
learn about the practical situation of a manufacturing company. This companied
encouraged the researcher to choose the topic of this internship program as
‘Role of plant assets’
Table of contents
SI.No.
|
Chapters
of contents
|
page no.
|
chapter-1:Introduction
|
||
1.1
|
Origin and
background of the report
|
|
1.2
|
Objective
of the study
|
|
1.3
|
Methodology
of the study
|
|
1.4
|
Limitation
of the study
|
|
Chapter-2: conceptual issues
|
||
2.1
|
Historical
background of RFL Ltd
|
|
2.2
|
Objectives
of plant assets management
|
|
2.3
|
Responsibilities
of accounts department
|
|
2.4
|
Plant
assets list graphics representation
|
|
2.5
|
Plant
assets management software
|
|
Chapter-3:
Data base
|
||
3.1
|
Accounting
policy
|
|
3.2
|
plant
assets
|
|
3.3
|
Depreciation
|
|
3.4
|
Revenue
Reorganization
|
|
3.5
|
Scope of
works
|
|
Chapter-4: Finding of the study
|
||
4.1
|
Definition
of plant assets
|
|
4.2
|
Capitalization
and valuation of the plant ass.
|
|
4.3
|
Capital
budget
|
|
4.4
|
Procurement
of plant assets
|
|
4.5
|
Formulation
of purchase committee
|
|
4.6
|
process of
purchase and authorization for payment
|
|
4.7
|
plant assets
register
|
|
4.8
|
plant
verification
|
|
4.9
|
Guideline
procedures for the maintains of the plant assets register
|
|
4.10
|
Specific
plant assets list
|
|
4.11
|
Charging
depreciation
|
|
4.12
|
Transfer of plant assets
|
|
4.13
|
Total production visits per year and graphical present
|
|
4.14
|
Net income list per year and graphical present
|
|
Chapter-5:
Conclusion
|
||
5.1
|
Summary of major findings
|
|
5.2
|
Recommendation
|
|
5.3
|
Conclusion
|
|
5.4
|
Appendix and bibliography
|
Chapter-1
: Introduction
1.1
Origin
& Background of the Report :
This report is being assigned as the part of
the degree BBA, to prepare this report under the University’s requirement. I
accommodate my inspection and field work in the RFl Ltd. For the completion of
the course, as an essential part. I had prepared this report. this report is
being formed on “The role of plant assets “of the stated company . From the
beginning I was working on varies plant assets of the company , my duty was to
locate the plant assets of the company
and report the finding to the accounts managers. plant assets management is
very essential part of this company because variety of types fixed plant assets
and thousand of items are include and smooth run of the company evaluate the
financial statement. For this reason I made this report on the rple of plant
assets of RFL Ltd.
1.2 Objective of the study:
Objective of my
study can be divided into two segment. These are given below:
1.2.1: Primary objective :
the primary
objective of the orientation are-
(a) to
study various desk works of the TFL
(b) To
analyze the performances of the region
well as TFL
1.2.2 Secondary objective are
(a) Acquire
knowledge about the a accounting
(b) To know about
the management of plant assets.
(c) To obtain a
first hand experience on working environment.
(d) To introduce
with electronic journaling and date processing system.
(e) To determine
the performance of the accounting department.
1.3 Methodology of the study
Like all
scientific pursuits in statistics also the investigator need not begin from the
very beginning he may use and must take into account what has already been
discovery by others. consequently before
starting a statistical investigator and learn what is already know of the
general area in which our specific
problems falls. where an investigator uses the date which has already been
collected by others. such date called secondary
data . secondary data can be obtained from journals reports publications
of research organization trade and professional bodies etc. However secondary
data must be used with at must care the user should be extra cautions in using
secondary data and should not accept it at its force value and the major source
of data for preparing the report in based on secondary information like annual
reports.
1.3.1 Secondary data were collected
from these two sources
(a) Internal data
: Internal data were collected from different annual report general report
articles and memorandum of talukdar foundry Ltd.
(b) External data:
These was significant source of external information of talukdar foundry Ltd.
1.4 Limitations of the study:
There were some
problems while doing internship . a
whole berthed effort was applied to conduct the internship and to bring a
reliable and fruitful result. In spite of having the whole hearted effort there
exit some limitation which acted as a barrier to conduct the program.
the limitation were –
*Time was
limited for the study
*Data
recording system of varies organization was found disorganized so their actual
business figure was not found accurately.
*In maximum
career officials told that they are to busy to talk so not today please come
latter
Chapter-2: conceptual Issues
2.1
Historical Background of Talukdar foundry ltd :
Talukdar foundry ltd.(TFL)is a manufacturing company
registered under the company act. The company stared its operation from 1998 .
as a manufacturing company .
Talukdar foundry
Ltd . is a part of Talukdar group of companies. This company includes in export
and import business. The company makes tube well and pumps. Tfl is a private
limited by shares and incorporate Bangladesh on march 09,2005under the company
act 1994 . It is entitled to all the benefits and interactive commonly allowed
by the government of Bangladesh to industrial unit established in export
processing Zone in the country. This material comes from other country. This
material comes in the factory of Jessore and process the raw Material . After
processing the company makes tube well and pumps.
2.2 Objectives of plant Assets management :
The objectives of plant Assets management is:
*To safe geared
the plant assets of talukder foundry Ltd to ensure the effective of the
existing resources
*To emphasis
culture of accountability over talukder foundry Ltd. plant assets.
*To ensure that
effective controls are communication to management and staff through clear and
comprehensive written documentation.
*To provide a
formal set of financial procedures that can be implemented to ensure that
talukder foundry Ltd financial assets policies are achieve and are in
compliance with the company plant assets related rules and regulations.
2.3 Responsibilities of accounts
department:
Responsibilities
of accounts department are –
*After acquisition
of any plant assets accounts department will generate an assets identification
number and hand over the number to related department for their marketing.
*Accounts
department will maintain the plant assets register.
*Accounts
department will calculate depreciation in every moth for accounting use. Accounts
department will conduct physical verification in every two months.
2.4 Plant assets list and graphical
presentation:
Sources
|
Cost (Scores)
|
Land
|
20
|
Land improvement
|
4
|
Building
|
15
|
machinery
|
10
|
Equipment
|
3
|
2.5 Plant assets management software :
Assets management is the processes
of planning designing and implementing advance systems in managing a company
assets . It controls and increase the efficiency at the assets owned by an
organization. it includes management of a company infrastructure plant property
and human resources. the various
components of assets very according to the industry type and needs as
business scenario is becoming more complex with large number employee there
individual work profiles and work flow
spread over varies department managing data and records manually is
nearly impossible and here assets management software provide the purpose of
managing and depreciation plant assets talukder
foundry Ltd uses assets as assets management software . It is used for
flexibility in categorizing and grouping assets depreciation is calculated and
can be viewed or printed both annually and monthly addition and disposal are
catered for easily and adjustment can be made to or assets cost price or opening
book value allowing much control over your register. both tax values and
accounting values are maintain and rolled over for each assets register has a
clean easy to understand user interface.
Assets management software enables
efficient managing of companies assets and is considered an important tool in
this company performance this software also manages physicals attributes of an
assets such finalizing the request valuation depreciation assets receipts and
maintain warranties and use data they entirely manage all the business
management issues comprising of cost management capital budgeting expresses accounting financial planning and
tangible goods now materials finished product this software also manage their
intellectual assets the assets management software provides analysis of data
which help company to make new strategy plans for each follow helps in the
fairest utilization of resources and in tour
increase the productivity of the company some other benefits of assets management
software include automatic tracking of all hardware and software across the
entire network of management system identification of unlicensed software
initialization and enhanced helpdesk productivity by presenting accurate assets
information and generation of reports that can be printed or emailed. various
departments of the company can access this asset data by the companies
intranet.
Chapter-3: Database
3.1 Accounting policy:
The financial statements of the
company have been prepared on actual basic of accounting (except cash flow
statement)under the historical cost convention in accordance with Bangladesh
financial reporting standard (BFRS) which fully comply with international
financial reporting standard (IFRS)except otherwise stated on related hotes.
3.2 plant Assets
planted assets are very impairment
part of any manufacturing company. this assets help most of the time to
produce. Without plant assets the company imaging the nature of business. A few
pliant assets have in any manufacturing company such as
1. Land
2. Land
Improvement
3. Building
4. Machinery
5. Equipment
3.3 Depreciation:
Depreciation is
computed on straight line method as follows:
Name of assets
|
Rate of depreciation
|
Building
|
20
|
Machinery
|
15
|
Equipment
|
15
|
3.4 Revenue reorganization:
Internal sales: RFL
recognizes inter-group revenue as and when the goods are shipped out from
Bangladesh.
External sales:
The company revenue arising out
of execution of orders to e0xternal parties
represents the value of orders executed during the year. TFL recognizes revenue
as and when the goods are shipped out from Bangladesh on Fob basis
3.5 scope
of works:
The
responsibilities group will be entitled to several task and operation. This
management system will not only integrates the separate departments for the
management of assets but also provide a better performance and providing proper
transparency of the company.
the scopes of the management of
fixed assets are following:
*fixed Assets Register
*Depreciation calculation
*Assets Marketing
*Assets Movement
*Physical verification
Chapter-4: Finding of the study
4.1 Definition of plant Assets:
Consistent definition is essential
to ensure good assets management and reporting. A plant assets is an assets
with a useful life more than one year used in the business of the company
characteristic of a depreciable plant assets are the following:
·
It is estimated the asset will be used for more
than one financial period
·
It has a limited useful life
·
It is used in a process of delivery services
·
The resources should provide future economic
benefits
·
The future economic benefits should accrue
·
The event raise to the right to the resources
and control over the future economic benefits must alright have occurred and it
should be possible to determine the cost of the assets reliably.
4.2 Capitalization and valuation of plant assets :
The fixed assets are
recognized and approved by the
management of accounts department and other management related to plant assets
dealing. there are previously created accounts heads in the “Tally” software.
the assets are matched with the head of journal accounts and input as plant
assets. there is no limit of criteria set to recognize plant assets by the
amount of expenditure. the expenditure which will provide benefits more than
current financial year and match with the head of ledger accounts should be
identified as plant assets and should be capitalized in the assets register.
For example, talukdar foundry Ltd
use stationery item which can be used more than one year. In a simple scenes it
should be identified plant assets but there is no policies and no journal heads
for identify stationery item as plant assets non the other hand many companies
identify and valuate their plant assets by limiting lower amount of expenditure
which is absent in talukdar foundry Ltd.
4.3 capital budget:
The capital budget is prepared for
capital and other operating and administrative expenditure the budget is
prepared from talukdar group. the parent of the talukdar foundry Ltd the budget
for talukdar foundry Ltd is prepared and provided it to the management of
Bangladesh. For every purchase and expenditure the related amount is matched
with the budget fails to meet them capacity of expenditure a request of special
approval for the expenditure is to sent to talukder group and after approval of
the special request the management under takes the action related to
expenditure.
4.4 procurement of plant assets :
All assets acquired must be in
terms of the capital budget assts must be procured in such a way that:
A proper net for the assets was
identified and proper and approval procurement procedures are ahead to.
Authorization for procurement
should be as per the department for delegation for authority and payment for
assets should be in accordance with financial policies budget and regulation of
the council the general manager in consultation with the financial controller
and other head of department formulate norms and standard for the replacement
or purchase of all normal operational assets such norms and standard are in
corporate in formal policy which shall be submitted to the council of talukdar foundry
Ltd for approval this policy covers the replacement or purchase for machine
furniture and fitting computer equipment and any other operational items. such
policy shall also provide for the replacement of plant assets which are
required for service delivery but which become uneconomical to maintain.
4.5 Formulation of purchase committee:
The purchase committee formulates
with related department and personal the following personal responsible for the
purchase committee:
·
Head of requiring department
·
purchase department representatives
·
finance department
Fig:
Purchase committee its process of activity
4.6 Process of purchase and authorization
for payment:
Talukdar foundry
Ltd purchase bits all plant assets in a systematic way and preplanned method
access able purchasing method is ‘ purchase order for this organization. any
purchase has the following purchase: 
Fig : purchase
procedure of plant assets
*Authorization
for payment:
Invoices are
authorized for payment for the completion of the receipting process.
4.7 Plant assets register:
The following
information should be kept in respect of assets:
ü
Assets number
ü
Assets type and de4preciation
ü
Purchase price , book value, depreciation
current period, accumulated depreciation, disposal value and date.
The plant assets
register shall be maintained in the format determined by the financial
controller, which format shall comply with the plant asset policy and any other
requirement prescribed, by rules and regulation. all heads of department under
whose control any plant assets falls shall provably provide the accounts
department with the plant assets register and shall advice the accounts
department of any material change which may occur in respect of such
information.
4.8 Plant verification:
To ensure the
completeness and correctness of assets on plant assets register all assets must
be physically verified and confirmed after every two months in a financial year. all plant assets used by
employees leaving the employment of company is verified on the day such
employe3es leave.
An officer is
employed to inspect the physical location of the plant assets. the plant assets
inspects the verity of assets with test basic procedures where samples for each
category assets are list and every related department is entitled physically locate the location of the assets.
the officer then prepares the report whether the sample assets fund or not in
their appropriate location according to location register. the external
auditors finally audit the assets.
4.9 Guideline procedures of the maintain of
the plant assets register:
The assets
officer must6 update the assets listing and plant assets register with the
approval assets requisite and submit it to the accountant for approval. on a
monthly basic the assets officer must perform reconciliation between the
general ledger values and the plant assets and inventory.
reconciliation as
correct. the change made to the plant assets register should be printed as
approved by chick account officer on a monthly basic.
Depreciation
rates used have to be approval by the chick accounts officer before they are
applied to the asset.
4.10 Specific plant assets list(such –
building machinery and equipment) :
Building:
Cost of building
includes all expenditure related directly to their acquisition or construction
these costs include material, labor, and overhead cost incurred during
construction and professional fess and building permits. building yearly cost
list and graphical presentation-
Year
|
cost(in cores)
|
2008
|
8
|
2009
|
11
|
2010
|
13
|
2011
|
14
|
2012
|
15
|
(cost in
corers)
|
Comment: The figure shows that TFL
building cost trend from 2008 to 2012. TFL building cost increase a little in
the year 2009 than 2008. In the year 2010 it increase more then 2010, but in
this year 2012 the building cost performance in much higher then the previous
year.
4.11Machinery: Cost of machinery
includes the purchase price freight and handling charges incurred insurance on
the machine while in transit cost of special foundation if required assembling
and installation cost and cost of conducting trial runs. machinery yearly cost
list and graphical presentation-
year
|
cost (in
corers)
|
2008
|
6
|
2009
|
7.5
|
2010
|
8
|
2011
|
9
|
2012
|
10
|
Comment: : The figure shows that RFL
building cost trend from 2008 to 2012. RFL building cost increase a little in
the year 2009 than 2008. In the year 2010 it increase more then 2010, but in
this year 2012 the building cost performance in much higher then the previous
year.
4.12. Equipment: Cost of equipment includes
the purchase price freight and handling charge incurred, insurance on the
equipment while in transit, cost of special foundation if required, assembling
and installation cost and cost of
conducting trial runs equipment yearly cost list and graphical presentation.
year
|
cost(in corers)
|
2008
|
1.2
|
2009
|
1.8
|
2010
|
2
|
2011
|
2.5
|
2012
|
3
|
Comment: The figure shows that RFL
building cost trend from 2008 to 2012. RFL building cost increase a little in
the year 2009 than 2008. In the year 2010 it increase more then 2010, but in
this year 2012 the building cost performance in much higher then the previous
year.
4.13 Financial disclosure requirement:
The financial statement should include disclosure in respect of asset.
guidelines for
financial disclosure
the financial statement includes the
following disclosures:
Ø
The depreciation method used.
Ø
Depreciation charged in arriving at net profit
or loss for the period
Ø
The gross carrying amount and accumulated
depreciation at the beginning and the end of the period.
The financial statement also disclosed the
following :
Ø
The existence and amount restriction on title
and property.
Ø
The accounting policy for the estimated cost
restoring the site of items of plant asset.
Ø
The amount of expenditures on account of plant
asset in the course of construction
Ø
The amount of commitments for the acquisition
plant asset.
The selection of
the depreciation method and the estimating of the useful life is a matter of
judgment there fore disclose of the method adopted and the estimated life or
depreciation rates provides financial statements with information which allows
then to review the policies selected by the management and enable comparisons
to be made with other enterprise. for simple reasons it is necessary to
disclose the depreciation allocated in a period and the accumulated
depreciation at the end of that period.
As enterprise
disclose the nature and effect of change in an accounting estimates that has
material effect in the current period or which is expected to have a material
effect in subsequent period in accordance with the statement on net profit or
loss for the period, fundamental error and changes in accounting policies. Such
disclosure may arise from change in estimate with respect to :
Ø
Residual values
Ø
The estimated costs dismantling and removing
items of property. Plant or equipment and restoring the site.
Ø
Depreciation method.
4.4 Charging depreciation : Talukdar
founder ltd prepares than every year. It prepares accounting reports for every
month and close the book of accounts. so the depreciation rate is calculated
for every single month. Generally Talukdar foundry ltd follows straight line
depreciation method with 20% depreciation rate for every plant assets. By
considering this method, it can be assumed that every assets has an economic
life of five years (20%*5 = 100%). The depreciation rate is converted to month
and record the depreciated amount to the ledger for example a machine has the
book value of 12000-00 Taka. For the
first month, the depreciation for this plant asset will be :
The depreciation
for the first month will be 2000 taka and the book value will be (
120000.00-2000.00) = 118000.00 taka and the depreciation for the second month
will be following :
There for the
depreciation for the second month will be 2000.00 taka and the book value will
be (118000.00-2000.00) = 116000.00 Taka.
4.15 Transfer of plant assets : When
plant assets are transferred between the departments a document with specific
authorization should be a attracted to the assets being transferred so as to
make sure that authority was given for that specific asset to be transferred.
The documents should also include full details of the asset being transferred
which should include :
Ø
Asset depreciation
Ø
Date of acquisition
Ø
Unique numbers
Ø
Effective date of transter
Ø
Quantity
4.16 Total production units per year and
graphical presentation :
The production of
tfl increase day by day. Total production units per year & graphical
presentation
Year
|
Total
production units (per year)
|
|
2008
|
100000
|
|
2009
|
120000
|
|
2010
|
140000
|
|
2011
|
155000
|
|
2012
|
180000
|
|
 |
||
Coment : The figure shows that tfl
production units trend from 2008 to 2012. Tfl production units increase a
little in the year 2009 than 2008. In the year 2010 increase more then 2009, in
the year it increase a little more then 2010. But in this year 2012 the
production units performance in much higher then the previous year. Their total
production units are also satisfactory in response to total plant assets.
4.17 Net Income list and graphical
presentation : Net income is very important for any company because the
company depend on net income. The net income of tfl is below .
Year
|
Tk (in corers)
|
2008
|
1.8
|
2009
|
2
|
2010
|
2.2
|
2011
|
2.5
|
2012
|
3
|
|
Comment : The figure shows that tfl
income trend from 2008 to 2012. Tfl net income increase a little in the year
2010 it increase more then 2009 in the year 2011 increase a little more then
2010. But in this year 2012 the net income performance in much higher then the
previous year. Their total net incomes are also year. Their total net incomes
are also satisfactory in response to total assets.
5.1 Summary of major findings :
Ø
Tagging and categorizing assets
Ø
To generate asset identification code
Ø
Main training assets related information (e.g.
date of purchase, historical cost, depreciation rate, user of the assets,
supplier information etc)
Ø
Calculating book value
Ø
Disposal information
Ø
Locating register etc.
Ø
Describe the major characteristic of plant
assets
Ø
Identify the cost including the initial
valuation of land. Building and equipment.
5.4 Appendix and Bibliography :
Bibliography :
Reports :
Ø
Annual report of RFl LTd (2010-2014)
Ø
Annual report of RFl Group (2010-2014)
Web Reference :
Ø
www. rflfounder.com.bd
Ø
www.wiley.com/college
l kieso
Ø
www. google.com
Book reference :
Ø
Intermediate Accounting (Eleventh edition) kieso
k Weygand warfield
Ø
Operational management-william j Stevenson :6th
Acronyms
:
BFRS
= Bangladesh Financial Reporting standard
IFRS
= International Financial Reporting standard
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