Professional Documents
Culture Documents
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Fixed Assets
Content : 1. Objective 2. Definition of Fixed Assets 3. Useful Life Time 4. Acquisition/Capitalized Date/ period 5. Acquisition/Capitalized Value 6. Value Limit 7. Minor Fixed Assets 8. Self-developed Software 9. Assets Under Construction 10. Capitalization of Costs Subsequent to Acquisition 11. Capitalization of Interest Costs 12. Impairment 13. Fixed Assets Transaction 13.1 Requisition 13.1.1 Requisition of fixed assets form 13.1.2 Approval by authorized person 13.1.3 Purchasing 13.1.4 Good receipt 13.1.5 Receive invoice from supplier 13.1.6 Create fixed asset number
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14. Depreciation 15. Reconciliation 16. Reporting 17. Fixed Assets Physical Inventory 17.1 17.2 Preparation phase Pre-inventory guidelines 17.2.1 Fixed assets after inventory 17.2.2 Fixed assets not owned by PT. Siemens Indonesia 17.2.3 Updating of records 17.2.4 Count teams Physical Inventory 17.3.1 Issuance of documentation for the physical inventory 17.3.2 Physical count of fixed assets 17.3.3 Physical count of fixed assets under construction 17.3.4 Verification of investigation Resume of production
17.3
17.4
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1. Objective
To ensure that the fixed asset position in the companys report reflects the accurate information on the existence of fixed assets physically and stated at proper values.
2.
Fixed assets are tangible assets which are acquired in a ready for use form, or are constructed for use by the enterprise, are not intended for sale in the enterprise's normal activities, and have a useful life of more than one year. So if an object is acquired for direct consumption/ use for a project and this object is completely consumed within the project or ownership is being passed on, this object can not be defined as a fixed asset. But if the object is used for more than one project and more than one year, it should be classified as a fixed asset.
3.
Useful life is either the period over which an asset is expected to be used by the company. (please see Depreciation)
4.
The effective date for capitalizing fixed assets is the date of receipt based on Receiving Report/ hand over certificate for the fixed assets under construction and for self constructed plant and equipment at the point of time when the expense are incurred The fixed asset remains capitalized as long as they are intended for economic use; this still applies to the fixed assets fully depreciated.
5.
Acquisition cost is the amount of cash or cash equivalents paid, or the fair value of other consideration given to acquire an asset at the time of its acquisition or during the asset's construction, until the asset is ready for its intended use.
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If the purchase price for an asset is contracted in foreign currency, the acquisition cost should correspond to the purchase price translated using the internal rate. The exchange rate fluctuations subsequently do not affect the acquisition cost, but are rather accounted for in payables as foreign exchange gains or losses.
6.
Value Limit
Total Acquisition Cost < IDR. 1,000,000.> IDR. 1,000,000.- < IDR. 2,500,000.> IDR. 2,500,000
Description
Should be expensed in acc. 61128xxx Minor fixed assets and fully depreciated in the year of acquisition. Capitalized as fixed assets and depreciated over the period of years
7.
Minor fixed assets are capital assets, which are movable, capable of being used independently and are subject to wear and tear. PTSI has 2 types of Minor fixed assets as follows: 1. Minor fixed assets including technical equipment and machinery (acc# 05190000) 2. Minor fixed assets other plant and office equipment (acc# 06190000) Minor fixed assets are fully depreciated in the year of acquisition and automatically calculated by the system.
8.
Self-developed Software
Self-developed software for own use must be recorded as Software under construction beginning with the design phase costs and subsequently a completion should be capitalized if the materiality limit is above EUR 500,000. The kind of costs that can be capitalized for software are: external direct cost of materials and services consumed in developing or obtaining software for internal use; payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal use;
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purchase price of software used in the research and development activities has alternative future uses; third party contract which provides for maintenance and unspecified upgrades and enhancements.
Cost transfer to software for internal use will be done when successful testing results have proven operability of the software.
9.
The acquisition of materials and services for construction of building, fabrication of equipment or software developments will be booked to an Asset Under Construction account. Once the asset under construction has reached the phase of its economic use/ intended for operational use, the acquisition and / or production costs are transferred to the final asset. AF Department will do the transfer. However, the initialization for this process must come from the commercial asset owner/ representative and supported by proven document, since only the owner knows the point of time when the asset is ready for its commercial use. Therefore all AuC owners are required to examine on a monthly basis when those transfers to be initiated. Depreciation will not be computed for assets under construction
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Besides that, Company has set the limit for capitalizing additional cost/ improvement of fixed assets, as follows: > EUR 250,000 for immovable assets; > EUR 50,000 for movable assets.
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Weighted average of accumulated expenditure is construction expenditures that are weighted by the amount of time that interest cost could be incurred on the expenditures. Interest rate used for calculating the amount of interest to be capitalized is: WAE<= specific borrowing, use interest rate from the specific borrowing; WAE > specific borrowing, use weighted average of interest rate incurred on all other outstanding debt; No specific borrowing, use the weighted average of interest rate on debt. The interest costs to be capitalized to the asset under construction have to be posted manually in the SAP system.
12. Impairment
Impairment is a significant decrease of the economic benefit of a fixed asset below its carrying amount. Hence the asset should be stated at an amount equivalent with the residual economic benefit. The impairment should be reported as a loss. A review for impairment should occur whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The following events or changes in circumstances that suggest the recoverability of the carrying amount of an asset should be assessed are as follows but are not limited to: the asset market value decreases significantly; the use of the asset is significantly changed in the extent or manner; legal factors or business climate changes adversely affect asset value; regulators adverse assessment or action; original expected costs are significantly exceeded; a history of cash flow losses and continued asset losses are forecasted.
Impairments should only be reviewed if the effect of each item/ issue is being greater than EUR. 1,0 million.
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13.
13.1 Requisition of Fixed Assets 13.1.1 Requisition of Fixed Assets Form. Preparation of Requisition for Fixed Asset Acquisition (excl. ICN, ICM & EV) as per form attached. 13.1.2 Approval by Authorized Person. Approval by authorized person as per PT Siemens Indonesia regulation. This form should be checked by the commercial concerned about the correctness of cost/ profit center and whether this is in line with the budget approved earlier. In case the requisition of fixed assets is not covered by budget, approval of CFO is required. Any purchase of Computer hardware and software requires the approval of OI Dept. 13.1.3 Purchasing After approval, purchasing dept. will issue the purchase order to the supplier. In general with the integration of the MM module, it is compulsory for ICN, ICM & EV to use the purchasing functionality in order to capitalize an asset. If an asset is to be purchased, the Fixed Asset Requisition Form is to be filled out. The requirements for Fixed Asset Requisition Form are: the asset has to be defined as a capital asset; the value will be reviewed by AF; the useful life is more than one year. For MM Module, before making the purchase order, fixed asset number should be obtained from Controlling Dept. (for ICN & ICM) and Commercial (for EV) since the asset number is defined internally in the system. 13.1.4 Goods Receipt Upon receipt of fixed assets from the supplier, Purchasing Dept./ Logistic Dept./ user must prepare the Receiving Report as the basic for acquisition date. For purchases by SAP MM, Receiving Report should be booked in SAP MM Module (Goods Receipt) by Purchasing Dept. or by Logistic Dept. The following is the flow of addition of fixed assets through MM Module: Addition of Fixed Assets (through the MM Module)
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Controlling Department Order Process Cost center who needs the asset prepare Fixed Asset Requisition Form
Purchasing Department
Fixed Asset Requisition form must provide the following information: (a) Cost Center Number (b) Description of the Asset (c) Estimated price and currency from Purchasing Department (d) Investment reason (detailed information) (e) Authorized signatures (Applicant, Technical GM, Commercial GM) (f) WBS Number if Asset is Project related
Based on Asset No. given by Controlling Dept. , process and issue the Purchase Order
Approval (by Head of Controlling Dept.) After that, issue Fixed Asset Requisition No. & Asset No. issued
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Controlling Department
Purchasing Department
Receipt Note
Handling over of asset to the cost center / user and user sign Receipt Note
Verified Invoice
AFA - PAYABLES
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Order Process
Fixed Asset Requisition form must provide the following information: (a) Cost Center Number (b) Description of the Asset (c) Estimated price and currency from Purchasing Department (d) Investment reason (detailed information) (e) Authorized signatures (Applicant, Technical GM, Commercial GM) (f) WBS Number if Asset is Project related
Based on approved FA Requisition, prepare Purchase Order and to be approved by authorized person in Business Unit
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Business Unit
Goods Receipt Receipt of asset and all related documents (incl. Invoice)
Prepare General Voucher to create addition in the transitory account Have to be approved by authorized person in BU General Voucher
Received Approved General Voucher and supporting document from Business Unit, AFA - Payables input the journal, AFA - Fixed Assets gives asset number which is provided by system. Based on invoice, transfer the asset from transitory account to the asset class.
13.1.5 Receipt of Invoice from Supplier. 13.1.5.1 Invoice Verification for FA purchased via SAP MM
Invoice from supplier is verified against Purchase Order and Receiving Report / goods receipt and posted to SAP MM by controlling/ commercial dept. 13.1.5.2 Booking Voucher Commercial Dept. (excl. ICN, ICM & EV) will prepare the booking (general voucher) to debit the transitory account of fixed assets (48566xxx). Supplier invoice, FARF, Purchase Order and Receiving Report to be attached with this GV and submitted to AF Dept.
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13.1.6 Create FA Number Except the MM Module, fixed assets number will be created by AF (is defined internally by the system) and supported by booking/ General Voucher, Purchase Order and Receiving Report. 13.2 Transfer of Fixed Assets The transfer of Fixed Assets to be used when: Transfer to another user within the cost center (Change User) Transfer to another Cost Center within the Business Area (Change CC) Transfer to another Business Area (Change Business Area) Transfer to another location
Every transfer of an asset should be filled out with a Transfer form that should be approved by an authorized person and submitted to AF for booking. New fixed asset number is required for transferring to another Business Area and it is defined internally by the system that can be accessed only by Fixed asset personnel in AF Dept.
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Business Unit
Fill Fixed Asset Transfer form with the following information: (a) Cost Center Number (b) Description of the Asset (c) Asset Class (d) Reason of Asset Transfer (e) Authorized signature
No
13.3
Retirements and Disposals A fixed assets should be eliminated/ written off from the balance sheet on disposal or when the asset is permanently withdrawn from use and no future economic benefits are expected from its disposal such as : Sale of Fixed Assets Lost/missing Broken/scrapped Others, Any other reasons than the above 3 reasons for disposal
Gains or losses arising from the retirement or disposal of fixed asset should be recognized as an income or expense (Class 6 for all fixed assets except land & building, Class 8 for Land & Building) and automatically computed by the system and posted to the respective GL account.
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Retirement form duly approved by the Commercial is required and submitted to AF for booking.
Business Unit Accounting Department (AFA)
Fill Fixed Asset Retirement/Disposal form with the following information: (a) Cost Center Number, Asset Number (b) Description of asset (c) Reason of Asset Retirement (d) Authorized by Commercial
Interface the Asset Accounting Module and system automatically calculate the book value and profit and loss from retirement. AF Personnel will fill in the posting date and the document number in Fixed Asset Retirement / Disposal form
13.4
Cessation of Employment On the resignation of an employee or cessation of employment, Personnel Department will issue a checklist to ensure that the company assets are returned to the respective cost center or division.
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14. Depreciation
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciation method used should reflect the pattern in which the assets economic benefits are consumed by the company. Depreciable amount is the acquisition cost of an asset, or other amount substituted for cost in the financial statements, less its residual value. Company decides to use straight-line method to allocate depreciable amount of assets. Below are the depreciation rates that are used by the company and agreed by ZFB:
Class Description Usefl.Lf PTSI 3 20 10 50 40 10 50 5 5-10 10 10 10 10 10 10 10 10 10 10 1 4 4 Usefl.Lf Gov. Tax 8 20 20 20 20 4 5-10 8 8 8 8 8 8 8 8 8 8 1 4 -
01300000 04110000 04120000 04311000 04312000 04313000 04315000 04316000 04331000 04390000 05111000 05112000 05121000 05130000 05140000 05150000 05160000 05161000 05170000 05310000 05180000 05190000 06110000 06111000
Capitalized Software Costs for Internal Used Land - NDE Land Improvements Office Buildings Workshop Buildings Other Solid Construction Buildings Residential Building - NDE Outdoor Installation & Facilities Capitalized Improvement for Building Leasehold Improvements Machineries Tools Balancing Machine Centrifugal Casting Utility Systems - Civil & Electrical Installation Conveying Systems Pump Test Field Air Conditioner Items Electrical Items Miscellaneous Production Facilities
Capitalized Improvement for Technical Equipment & Machineries
Fixed Assets for Lehrwerkstat Minor fixed asset incl.Tech.equip.a.machinery Motor Vehicles Motor Vehicles - NDE
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06120000 06130000 06131000 06140000 06150000 06160000 06170000 06181100 06181200 06183000 06830000 06190000 06300000 07110000 07120000 08100000 08200000 08310000 08800000
Data Processing System Communication Systems Cellular Phones - NDE Automative Equipment Standard Testing Equipment Special Tools and Special Testing Equipment Standard Tools Office Furniture - Wood Office Furniture - Steel Office Equipment Other Equipment
Minor Fixed Assets - Other Equip.Plant.a.Office
Capitalized Improvement ATM Machines Information & Communication Systems Buildings - in Progress Machinery and Equipment under Construction Advances for Fixed Asset AUC - Other Fixed Asset N/A N/A N/A N/A
8 8 8 4 4 4 4 8 8 8 1 8 8
Depreciation of improvement If the remaining life of the improved asset is less than 50% of the original life, a depreciable life should be determined by the management. If the remaining life of the improved asset is greater than or equal to 50% of its original life, the remaining original life shall be used. Depreciation keys are maintained correctly for each depreciation area in the asset master record. At the end of each period a program needs to be executed to compute the depreciation on each asset for all depreciation areas and to post to general ledger account for depreciation computation. Asset accounting personnel will conduct this phase.
15. Reconciliation
The reconciliation report should be prepared through the system by OI Department in order to identify inconsistencies between Asset Accounting line items and the balances of asset reconciliation accounts in the General Ledger. Should there is any inconsistencies, these are classified by the error category and displayed with a note.
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16. Reporting
There are a number of standard reports available for the analysis of asset transactions. The following report will be provided through the Asset Accounting Information System: Asset portfolio (asset history sheet, asset master data changes report) Listing of assets (posted and unposted asset) by asset number, by asset class, by business area, by plant, and by cost center. Asset balance report based on period closing date per asset detail or total only Asset movement, asset transfer, and asset retirement Depreciation report contains: Posted depreciation Depreciation for each period per depreciation area Chart of depreciation Inventory data, printing of fixed asset tags for inventory monitoring. A program to generate tags for assets is available in the SAP system in the tree PTSI Daily Report for Assets.
17.1 Preparation Phase AF department will decide the cut off date (asset balance date) as a basis for fixed assets physical inventory. Preparation phase of physical checking of assets to be made by AF are: Printing Asset Balance separate (detail list) per Cost Center and per Asset Class. Distributing the asset list to each cost center for preliminary reconciliation. Modifying for additional information to Asset List/Description such as; user name, fabrication, number of CPU/monitor, etc., Printing; Modified Asset List, Bin card, and Bar Code Label.
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17.2
Pre-inventory guidelines 17.2.1 Fixed Assets "after inventory" A designated area will be marked with yellow strips around it and marked "Receipts after Inventory". Here all receipts of Fixed Assets received the day before until the physical inventory is finalized. An assignee by AF will make the announcement that the physical inventory is concluded. 17.2.2 Fixed Assets not owned by PT Siemens Indonesia All Fixed Assets that do not belong to PT Siemens Indonesia, such as Fixed Assets furnished to PT Siemens Indonesia free of, etc. have to be marked with a red marker, tape or paint. Reasonable proof of above-mentioned circumstances in regard to ownership has to be made available and attached to the Fixed Assets. Asset under Construction On a.m. date, 8h all papers accompanying the Fixed Assets under Construction in the facilities will be attached to the Fixed Assets completed so that the work paper reflect the accurate and current status of the Fixed Assets under Construction. The production system (if the maintaining of the work order is generated through the production system) is to be updated by the same time to reflect the correct and actualized status of each order under production facilities and all time cards have to be entered. There will be no excuse accepted by management that required necessary administrative or technical work is delayed or not performed in such a timely fashion, that the accuracy of the physical inventory is endangered, postponed or not accurate. 17.2.3 Updating of records All paper work, such as receipts and disbursements of materials, which are part of the Fixed Assets under Construction, and receipts of purchased Fixed Assets have to be concluded by entering into the computer system. No excuse will be accepted that such procedure is not followed. AF Dept. Staff will inform OI that all data have been entered into the computer system by written instrument indicating date and time of conclusion. OI will start data processing and produce the necessary documentation. Fixed Assets cards will be printed consisting of one original and two identical copies (as one set) indicating the description of the Fixed Asset, Fixed Asset number, Serial number, if any, cost center, etc. These Fixed Assets cards will
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be attached to the respective Fixed Assets on or before the start of the inventory. 17.2.4 Count teams The count-teams and the supervisory personnel names, time and place will be distributed with separate memo by AF Dept. staff as the supervisor in order to be acquainted with the location. These guidelines will be discussed and after the meeting each person will be asked that he or she fully understood the guideline and that he or she would fully cooperate in adhering to the guideline. 17.3 Physical inventory procedure 17.3.1 Issuance of documentation for the physical inventory Each counting team will receive: One copy of FA Inventory Taking Procedure One ball-point pen One small towel One set of pre-numbered white tags (see attached sample) One roll of adhesive tape, or Such other glue as needed to affix the tags to the Fixed Assets item Each counting team will have the last opportunity for last clarifications of this guideline. The issuance of pre-numbered white cards to the team will be logged in a separate form so that the completeness of the issued tags is guarantied. 17.3.2 Physical Count of Fixed Assets Each counting team will take position in its designated area and the following procedure will apply. The team will verify that the Fixed Asset so marked by the Fixed Assets card is in existence and will make correction as to the description, serial number or Fixed Assets number on the Fixed Assets card, if any. This top sheet will be removed by the count team and kept for handing over to the supervisory team upon completion of the count in the designated area. In case that there is no Fixed Assets card attached to the Fixed Asset the following procedure applies: On the Fixed Assets card the description, the serial number, the cost center and the location or any other information that appears to be appropriate will be noted. The Fixed Asset card tag will be attached to the counted Fixed Assets. The top copy will be kept by the count team for handing over to the supervisory team later on. Then the remainder will not be removed by anybody until the
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announcement, that the physical inventory is concluded is released. In case of any technical question, there will be three technical advisors from the company facilities available as consultants only. These consultants can not dictate, organize or make recommendations other than to help identifying Fixed Assets. When the counting team has concluded counting its designated counting area the counting team will return the top copy of the Fixed Assets card to the head of the supervisory team, i.e. BA, IQ, OI, etc. AF Dept. staff will receive the cards and will immediately check against form that mentioned in point 2.1 here to whether the return is completed by checking the sequence of the card numbers. Any alteration of the cards other than stipulated above, cross-outs and/or any correction on the original card will not be accepted. Should the team encounter an error in whatever way, this tag has to be marked "Void" and a new tag is to be filled-out. Both tags have to attach to the Fixed Assets counted. 17.3.3 Physical count of "Fixed Assets under Construction" As mentioned in point 1.2, documentation will be updated to the latest work step for Fixed Assets under Construction. Any Fixed Asset under Construction left next to a machine, in designated intermediate storage area or in any part of the facilities has to be counted and investigated. The investigation consists of the - amongst others - following check: whether the work paper coincide with the work actually performed at the time of investigation on the piece of Fixed Assets under Construction being investigated and whether the time spent working on fulfilling the requirements as per the work papers are reasonable. In case of differences in opinion between the actual work paper and the work actually performed or the status of the piece of Fixed Asset under Construction, the following should be done: the opinion of the count team is to be noted down on a piece of paper identifying the work order number, the reason for the difference in opinion, location of the Fixed Asset under Construction.
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Based on this report, one of the technical consultants is to be called for discussions. In case the technical consultant cannot clarify the discrepancies in a reasonable fashion and/or if the answers presented by the consultant are not reasonable in the sole opinion of the counting team, External Auditor (KPMG) is to be called for further action as deemed necessary by External Auditor (KPMG) in its sole opinion. Here is reference to be made; that after the conclusion of the physical count all findings will be entered into the Fixed Assets computer module. After clarification of the content of the position and the verification is finished, a copy of the card will be attached to the work order. When the counting team has concluded investigating its designated counting area the counting team will return the cards to the head of the supervisory team, i.e. BA, IQ, OI, etc. AF Dept. staff will receive the cards and will immediately check against form that mentioned in point 2.1 hereto whether the return is complete by checking the sequence of the card numbers. Any alteration of the cards other than stipulated above, cross-outs and/or any correction on the original card will not be accepted. Should the team encounter an error in whatever way, this card has to be marked "Void" and a new card is to be filled-out. Both tags have to attach to the Fixed Assets counted. 17.3.4 Verification of investigation During the physical count is being conducted, random checks by an independent team will be conducted. In case of discrepancies between the original investigation and the random investigation, this discrepancy will be brought to the attention of the original counting team for re-investigation. Corrections, if necessary, will be done immediately after the verification is concluded. 17.4 Resume of production After the successful conduction of the physical count, management as described above, will officially conclude that the inventory of Fixed Assets is finalized and the production in the facilities can resume.