Introduction to Fixed Assets

This user guide describes the Temenos Transact Fixed Asset solution. The functional breadth and depth of the current fixed asset solution have been demonstrated with supporting screenshots.

The screen images contained in this document have been produced from Temenos Transact. Essentially, the Model Bank is a pre-configured version of Temenos Transact which comes with a set of established menus, screens, enquiries, reports, and processes built around industry best practices that support a wide range of industry-standard products.

In the current day scenario, fixed assets owned by the organisations are expected to be kept in order and to comply with legislation governing corporations, companies, etc. A common problem in most organizations is the improper maintenance of the fixed assets. Physical verification of fixed assets becomes a futile exercise unless they are properly maintained within the core banking solution.

The Temenos Transact fixed asset solution allows an organization to keep track of details of each fixed asset, ensuring control and preventing misappropriation of assets. It also keeps track of the correct value of assets, which allows for computation of depreciation and other events including transfer, disposal, and write-off.

The following items are out of the scope of this document:

• Capital allowance.
• Multiple depreciation methods.
• Manual settlement of CWIP.

The Temenos Transact fixed asset solution has been designed to facilitate the banks to record and maintain the fixed assets held by them.

The major functionalities covered in this solution are:

• Creating an asset in the asset register application. There are three types available, they are for freehold buildings, leasehold buildings, and the rest of the assets.
• Transferring movable assets from one branch to another and generating accounting entries. This will generate a funds transfer with the purchase amount.
• Disposal and write-off of an asset from the asset register application and generating accounting entries.
• The disposal also will create a funds transfer with sale amount, if the sale amount is specified in the asset register record.
• Computation of depreciation at a monthly interval based on the straight-line method.
• Enquiries available to show the reports regarding the fixed assets branch-wise.

Fixed Assets Definition

Assets of an organisation include land, machine, office equipment, building, patent, trademarks, copyrights, etc. held for the purpose of production of goods or rendering of services and not held for the purpose of sale in the ordinary course of business. Fixed assets are also known as non-current assets which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred to as fixed.

Fixed Asset Maintenance

Fixed assets normally include items such as land and buildings, motor vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and machinery. During an asset's life span, the asset can go through several maintenances including depreciation, disposal, write off or transfer to another branch.

Depreciation

Depreciation is, simply put, the expense generated by the uses of an asset. It is the wear and tear of an asset or diminution in the historical value owing to usage. Further to this, it is the cost of the asset less any salvage value over its estimated useful life. It is an expense because it is matched against the revenue generated through the use of the same asset.

Depreciation is usually spread over the economic useful life of an asset because it is regarded as the cost of an asset absorbed over its useful life. Invariably the depreciation expense is charged against the revenue generated through the use of the asset.

The method of depreciation to be adopted is best left for the management to decide in consideration to the peculiarity of the business, the prevailing economic condition of the assets, and existing accounting guidelines and principles as implied in the organisational policies.

It is worth noting that not all fixed assets depreciate in value year-over-year. Land and buildings, for example, may often increase in value depending on local real-estate conditions.