12 Questions
What is the main purpose of maintaining asset records in BSNL?
To follow guidelines from the Company Act 1956
Which of the following is NOT a type of fixed asset according to the text?
Bank Balance
What is Work in Progress (WIP) in the context of asset management in BSNL?
Assets under construction or development
Why is it necessary to maintain a Consolidated Fixed Asset Register at Circle Level in BSNL?
To comply with legal requirements for accuracy and consolidation
Which of these is an example of a fixed asset according to the text?
Office Machinery
What do fixed assets in a company like BSNL primarily consist of?
Infrastructure assets like Land and Building
What is the main difference between tangible assets and intangible assets?
Tangible assets have physical substance, while intangible assets do not.
How are capital expenditures initially treated in accounting for fixed assets?
Under Inventory, Work in Progress, or directly under Asset.
When is depreciation applied on fixed assets?
From the date of booking under Fixed Asset.
Which costs are included in the purchase price of fixed assets?
Other directly attributable costs, professional fees, and taxes.
In the context of BSNL, how were overheads initially provided for during the DoT period?
On a percentage basis.
What happens to interest and finance charges on loans identified with a particular project or scheme in relation to fixed assets?
They are allocated to the respective project before being capitalized.
Study Notes
Tangible and Intangible Assets
- Tangible assets have physical substance and can be seen and touched, examples include Buildings, Plant, and machinery.
- Tangible assets are governed by Accounting Standard 10.
- Intangible assets do not have physical substance but are expected to provide future economic benefits to the enterprise, examples include goodwill, trademark, computer software, and patents.
Asset Classification and Expenditure
- Assets and liabilities of DTS and DTO were transferred to BSNL on its formation on 01.10.2000.
- Assets worth approximately 63,000 crore were provisionally transferred to BSNL.
- Expenditure incurred by the company can be classified as either revenue expenditure or capital expenditure.
- Capital expenditure is initially booked under Inventory, Work in Progress, or directly under Assets.
Capital Expenditure and Depreciation
- Depreciation on assets starts from the date of booking under Fixed Assets.
- Depreciation does not start until the capital expenditure is transferred to Fixed Assets, if booked under WIP or Inventory.
Cost of Fixed Assets
- A fixed asset is capitalized at cost, which includes:
- Purchase price
- Other directly attributable costs (e.g. site preparation, installation, and related professional fees)
- Customs and other taxes and duties (less rebates)
- Interest and finance charges on loans identifiable with a particular project/scheme
- Administration and other general overhead expenses specifically attributable to construction or acquisition
Asset Management in BSNL
- BSNL maintains detailed Fixed Asset Registers at SSA and Circle levels.
- Assets are classified into two types: current assets (e.g. Cash in hand, Amount receivable) and fixed assets (e.g. Land, Building, Apparatus & Plants, Computers, Office Machinery).
- Fixed assets are further classified into categories.
Test your knowledge on the management of assets in BSNL, covering topics like asset classification, maintenance of records, scrapping, and disposal. This quiz focuses on Chapter 13 of the E3-E4 Management Revision material dated 05-04-2011.
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