A

PROJECT SYNOPSIS

ON

“FIXED ASSETS MANAGEMENT”

AT
LG ELECTRONICS IND PVT LTD

SUBMITTED BY
B. GANESH
1168-20-672-046
UNDER THE GUIDANCE OF
------------------------------------------------

SUBMITTED IN PARTIAL FULFILMENT FOR THE AWARD OF

DEGREE

IN

MASTER OF BUSINESS ADMINISTRATION

BY

OSMANIA UNIVERSITY

PALLAVI COLLEGE OF BUSINESS MANAGEMENT

BOLTON ROAD, SECUNDERABAD.

2020-2022
 1.1 INTRODUCTION

Fixed Assets are the assets held with the intention of being used on continuous basis for the

purpose of producing or providing goods or services and are not held for resale in the normal

course of business.

E.g.: Land and Buildings, Plant and Machinery, Motor Vehicles, Furniture and Fixtures.

Valuation of fixed assets is important to have fair measure of profit or loss and financial

position of the concern. Fixed assets are meant for use for many years. The value of these

assets decreases with their use or with time or many other reasons. A portion of fixed assets

are reduced by usage are converted into cash through charging depreciation. For correct

measurement of income, proper measurement of depreciation is essential, as depreciation

constitutes a Part of total cost of production.

Financial transactions are recorded in the books, keeping in view the going concern aspect of

the business unit. In going concern aspect it is assumed that the business unit has reasonable

expectation of continuing the business for a profit for an indefinite period of time. This

assumption provides much of the justification for recording fixed assets at original cost and

depreciating them in a systematic manner without reference to their current realizable value

It is useless to record the fixed assets in the balance sheet at their estimated realizable values if

there is no immediate expectation of selling them. So, they are shown at their book value (i.e.,

Cost –Depreciation) and not at current realizable value. The market value of the fixed assets

may change with the passage of time, but for accounting purpose it continues to be shown in

the books in historical cost.

The cost concept of accounting states that depreciation calculated on the basis of historical

cost of old assets is usually lower than the amount calculated at current value/ replacement

value. These results in more profits, which if distributed in full will lead to reduction in

capital.

ACCOUNTING STANDARD FOR FIXED ASSETS (AS-10):

AS-10 on Accounting for Fixed Assets has been made mandatory with effect from

01.04.2091. According to the AS-10, “Fixed Assets an asset held with the intention of being

used on continuous basis for the purpose of producing or providing goods or services and is

not held for resale in the normal course of action”. Gross book value of fixed asset is its

historical cost or other amount substituted for historical costs in the books of accounts or

financial statements. When the amount of depreciation is deducted from gross book value then

it is Net Book Value.

Cost of Fixed Assets: should consist of purchase price including import duties etc., and

attributable cost of bringing the asset to its working condition for its intended use. Financing

costs relating to borrowed funds attributable to construction or acquisition of fixed assets for

the period up to the acquisition or completion. Expenditure incurred in start-up and

commissioning of the project including test runs.

Revaluation of assets: Fixed assets may be restated in the value with the help of appraisal

under taken by the competent values .Such valuation of assets is called revaluation.
FIXED ASSETS MANAGEMENT CYCLE:

The fixed assets management cycle is the cycle of activities from the acquisition of the asset to the

final disposition of the assets at the end of their useful life. The cycle has 7 steps:

Acquisition: The cycle begins with the acquisition, purchase, gift or otherwise, of an asset and

the determination that the asset is to be capitalized.

Receiving: The asset is formally received and accepted by the agency.

Payment: Payment is made for the asset according to the terms of the purchase order or

recognition of acceptance of a gift to the donor.

Identification: The asset is identified as an asset, tagged or otherwise identified and entered

into the fixed assets management inventory system..

Inventory: Assets are inventoried and accounted for during this step until they are no longer

needed.

FIXED ASSETS MANAGEMENT CYCLE

Excess: The asset is declared as excess to the user’s needs.

Surplus: The last step in the fixed assets management cycle. The asset is declared to be surplus

property and to have no further value to the agency.

1.2 NEED OF THE STUDY

As fixed assets play an important role in company’s objectives. These fixed are not

convertible or not liquid able over a period of time. The owner’s funds and long term

liabilities are invested in fixed assets. Since, fixed assets play dominant role in the business

and the firm has utilization of fixed assets. So, ratio contributes in analyzing and evaluating

the performance of the business.

Fixed assets are the assets which cannot be liquidated into cash within one year. The huge

amounts of funds of the company are invested in these assets. Every year company invests an

additional fund in these assets directly or indirectly. The survival and other objectives of the

company depend on operating performance of management i.e. effective utilization of these

assets.

Firm has evaluated the performance of fixed assets with proportion of capital employed on net

assets turnover and other parameters which are helpful for evaluating the performance of fixed

assets.
1.4 SCOPE OF THE STUDY

The project is covered on fixed assets of LG ELECTRONICS IND PVT LTD .

Drawn from annual reports of the company. The subject matter is limited to fixed assets, its
analysis and its performance but not to any other areas of accounting corporate, marketing
and financial matters. The entire fixed assets management matters taken by the company
records, in this fixed assets acquisition, receiving, payments, identification, inventory, surplus
involving in this fixed assets management.
Fixed assets management is an accounting process that seeks to track fixed assets for the
purposes of financial accounting, preventive maintenance, and theft deterrence. Organizations
face a significant challenge to track the location, quantity, condition and maintenance and
depreciation status of their fixed assets.
1.3 OBJECTIVES OF THE STUDY

The following are the objectives of the study

1. To study the amount of capital expenditure made by the company LG

ELECTRONICS LTD.

2. To analyze the fixed assets turnover of LG ELECTRONICS LTD.

3. To study depreciation and method of depreciation adopted by LG ELECTRONICS

LTD.

4. To examine the amount of finance made by long-term liabilities and owners funds

towards fixed assets.

5. To study whether fixed assets are giving adequate returns to the company.

6. To study is conducted to evaluate fixed assets performance of LG ELECTRONICS LTD

1.5 RESEARCH METHODOLOGY

The data used for the analysis and interpretation is from annual reports of the company i.e.,

secondary forms of data. Ratio analysis is used for calculation purpose.The project is presented

using tables, graphs and with their interpretations. No survey is undertaken or observation study is

conducted by evaluating fixed assets performance of the company.

SOURCES OF DATA:

 The data needed for this project is collected from the following sources:

 The data is adopted purely from secondary sources.

 The theoretical contents are gathered purely from eminent text books and references.

 The financial data and information is gathered from annual reports of the company.

PERIOD OF STUDY:

Made a study for the period of 5 years 2016-2020.

SECONDARY DATA:

 The data gathering methodology is adopted purely from secondary sources.

 The theoretical content is gathered from eminent text book reference and library at

LG ELECTRONICS PVT LTD.

 .The financial data and information is gathered from annual reports of the company's

internal records.

.
 LIMITATIONS

The following are the limitations for the study

 The study is limited into the date and information provided by the LG ELECTRONIC
LIMITED and its annual reports.
 The report may not provide exact fixed assets status and position of LG ELECTRONIC
LIMITED; it may be varying from time to time and situation to situation.
 This report is not helpful in investing in LG ELECTRONIC LIMITED
 Either through disinvestments or capital market.
 The accounting procedure and other accounting principles are limited by the changes made by
the company, may vary fixed assets performance.