FIXED ASSET MANAGEMENT SOP

1. Business goals
1.Strengthen the management of various fixed assets of the company, ensure the normal
operation of fixed assets and maximize their effectiveness, make full and effective use of
existing fixed assets to serve production and business activities, prevent waste and loss of fixed
assets, and maintain company property safety and integrity of the company ensure the smooth
progress of production and operation activities.
2. Ensure that standards of production technology, product quality standards, safety,
efficient production transfer of customer satisfaction, market need.
3. Regularly assess the utilization effect and integrity rate of fixed assets to ensure the
preservation of the company's fixed assets and maintain stable asset operation capabilities.
4. Establish and improve various fixed asset accounts and files to ensure that the accounting
of fixed assets is true, accurate, and complete, and the accounts are consistent with the relevant
requirements of the company's accounting standards.
5. Reasonable depreciation, truly reflect the company's costs and profits, and correctly
evaluate operating results.
6. Fully tap the potential of existing fixed assets, promote the improvement of product
quantity and quality, and reduce product costs.
7. The management of fixed assets complies with the relevant national safety, fire protection,
environmental protection and other regulations and the internal rules and regulations of the
stock headquarters.

2. Business risks
1.Fixed assets cannot meet the existing production and operation requirements, resulting
in low production capacity and unable to meet the needs of the company's strategic
development.
2.Lax management of fixed assets leads to potential safety hazards, environmental
pollution and other problems, affecting the normal production of production and causing
adverse social impacts.
3.The production equipment technology is not up to standard, causing products to
encounter market exclusion, gradually shrinking market share, or even withdrawing from the
market.
4.Due to improper storage, improper use, theft, damage, accidents, etc., resulting in loss of
fixed assets.
5.Assets are damaged due to long-term idleness, loss of use value, failure to apply for
insurance in time, and economic losses to the company.
6.The purchase and disposal of fixed assets without proper authorization or beyond
authorization may cause asset losses due to major errors, fraud, and fraud.
 7.Incorrect decisions on the purchase and construction of fixed assets may result in the loss
of company assets or waste of resources.
8.Improper disposal of fixed assets may cause loss of company assets.
9.The accounting treatment of fixed assets and related information are illegal, untrue, and
incomplete; the accounting is not standardized and the accounts are recorded incorrectly; it
may cause the company's asset accounts to be inconsistent or asset losses, and affect the
authenticity of financial information.
10.Errors in depreciation, resulting in distortion of costs and expenses.
11.Violation of national regulations on the management of fixed assets such as safety, fire
protection, and environmental protection, and internal rules and regulations of the stock
headquarters, subject to external penalties, resulting in company economic losses and credit
loss.

3. Business scope
This business process mainly describes business processes related to fixed
assets. Including the division of responsibilities and authorization approval, fixed asset
budgeting, fixed asset acquisition and acceptance control, fixed asset use and maintenance
control, fixed asset disposal and transfer control, fixed asset accounting system control, etc.

4. Business process description

1. Classification of fixed assets
1.1. Fixed assets are generally divided productive fixed assets, non-productive fixed assets,
leased fixed assets, unused fixed assets without fixed assets, financial leasing fixed assets,
donations and other fixed assets.
1.2. Depending on the nature and use of the fixed assets of the fixed assets are classified
into 5 categories: ① houses, building houses, ② machinery, machinery and other production
equipment, ③ and production and business activities related to appliances, tools, furniture, ④
transport Equipment, ⑤ electronic equipment.
2. Division of labor and authorization of fixed asset positions
2.1. The company should establish a fixed asset position responsibility system.
2 .2. Fixed assets business incompatible positions include but are not limited to:
Preparation and approval of fixed asset investment budgets.
Approval and execution of fixed asset investment budget.
Procurement, acceptance and payment of fixed assets.
Application and approval of fixed assets insurance.
Approval and execution of fixed assets disposal. Implementation and related accounting
records of the acquisition and disposal of fixed assets.
 2.3. The company shall establish a strict authorization approval system for the fixed asset
business, clarify the method, authority, procedure, responsibilities and related control measures
for the authorization scope approval, and stipulate the scope of responsibility and work
requirements of the handler. Unauthorized institutions or personnel are strictly prohibited from
handling fixed asset business.
2.4. The approver shall conduct approval within the scope of authorization in accordance
with the provisions of the fixed asset business authorization approval system, and shall not
exceed the approval authority.
2.5. The handler shall handle fixed asset business in accordance with the approval opinions
of the approver within the scope of his duties. For fixed assets business approved by the
approver beyond the scope of authorization, the handler has the right to refuse to handle it and
report to the first-level management department in a timely manner. For details, please refer to
" Approval Flow and Authority Setting of company "
3. Project establishment for the purchase of fixed assets
3.1. The acquisition of fixed assets implements a centralized application project system.
3.1.1. The company shall establish a fixed asset budget management system. The business
management unit draws up fixed asset investment projects based on factors such as production
and operation development goals and the use of fixed assets, conducts feasibility studies and
analyses on the projects, prepares fixed asset investment budgets, and submits them to the
company’s budget management committee for approval. For the purchase of the unit value
of 1 00 major solid yuan of fixed assets investment projects, it should hire an independent
agency or professional conduct feasibility studies and evaluation, collective decision-making
and approval.
3.1.2. The company shall strictly implement the fixed asset investment budget. For fixed
asset investment projects within the budget, the operating management unit and relevant
departments shall strictly follow the budget progress to go through the relevant procedures; for
the over-budget or off-budget fixed asset investment projects, the relevant responsible
department of fixed assets shall submit an application and follow the prescribed approval
process Go through relevant procedures after approval.
3.1. 3. Overseas production departments or equipment management departments submit
purchase applications for machinery and equipment , instruments and transportation equipment
for outsourcing production ; overseas quality control departments submit applications for
purchase of machinery and equipment, instruments and meters for laboratory testing ; other
office equipment by the overseas administrative department or sub- company proposed
purchase, be purchased by the performance of the project approval process.
3.1.4. Refer to the above process regulations for the establishment of self-built fixed assets.
3.1.5. The purchase of fixed assets by the company or management department shall refer
to the above process regulations.
 3.1.6. Refer to the " Approval Flow and Authority Setting of Company" for specific
approval procedures and authority for the purchase of fixed assets .
3.2. The financial department is responsible for the approval of the capital requirement
plan for asset purchase and the payment procedures.
4. Acceptance of fixed assets
4.1. Acceptance of purchased fixed assets
4.1.1. The types, specifications, quantities, prices, quality, technical requirements, etc. of
the purchased fixed assets shall be checked and accepted according to the contract agreement
and the supplier's invoice.
4.1.2. After the purchased fixed assets arrive, the centralized management department will
take the lead, and the relevant departments will coordinate the acceptance and commissioning.
If necessary, external professional organizations can be asked for assistance.
( 1 ) Fill in the "asset installation acceptance form" for the assets that have passed the
inspection and perform storage processing. For the assets that are not qualified for the
inspection and acceptance, contact the supplier in time for processing, and make a claim in
accordance with the contract terms.
( 2 ) After passing the inspection and acceptance, the purchaser shall hold the purchase
contract, invoice, warehousing form, acceptance form and relevant approval documents,
and go through the payment procedures after completing the fund approval procedures.
4.2. Acceptance of self-built fixed assets
4.2.1. For the fixed assets built by the company , the manufacturing department, the fixed
asset management department and the user department should jointly fill in the fixed asset
transfer list, and transfer it to the user department for use after the acceptance is passed.
4.2. 2. Carry out the acceptance check in accordance with the "Measures on the
Management of Acceptance of Self-built Projects" by the Strategic Investment and
Construction Department of the company , and perform the payment procedures in accordance
with the contract after audit by the internal risk control department. (The main content of the
above measures should be listed here)
4.3. Fixed assets obtained by other means
4.3.1. The company shall go through the corresponding inspection and acceptance
procedures for fixed assets acquired by investors, accepting donations, debt
restructuring, company mergers, non-monetary asset exchanges, and gratuitous transfers.
4.3.2. For fixed assets under operating leases, borrowing, and escrow, the corresponding
inspection and acceptance procedures shall also be performed, and a register shall be set up to
record for future reference.
5. Requisition of fixed assets
5.1. After the asset is checked into the warehouse, the user department should fill in the
“asset acquisition form” and go through the approval procedures for asset acquisition. The asset
management department handles the exit procedures according to the “asset acquisition form”
and the acquisition approval procedures, and changes the assets Relevant file information.
5.2. Asset management personnel record the outgoing situation, use, and storage status of
assets. The custodian prepares a triplicate asset transfer form, which is signed and approved by
the person in charge and submitted to the warehouse custodian, asset use department and
financial management department for retention.
5.3. The asset use department registers the fixed asset card according to the fixed asset that
is used. The financial department registers the fixed asset's whereabouts in the fixed asset
register and the fixed asset record card, and records the department where each fixed asset is
located in the memorandum record. .
6. Custody and maintenance of fixed assets
6.1. Each unit shall carry out centralized storage according to the types of fixed assets or
use departments, establish and improve the fixed asset number management system, establish
a record index system, and store relevant information in the financial software of their
respective companies to ensure that they have sufficient information for fixation Effective
identification and inventory of assets.
6.2. The company should strengthen the daily management of fixed assets, clarify the
management system of the person responsible for the custody of fixed assets, especially the
management system of the person responsible for mobile fixed assets, so as to ensure that clues
can be found quickly when fixed assets are lost or damaged. Responsibility, implement rewards
and punishments.
6.3. The company shall determine the classification standards and management
requirements of fixed assets in accordance with the relevant requirements of the country and
the industry and the needs of its own operation and management, formulate and implement the
fixed assets catalog system, and the company shall implement it in accordance with this
regulation.
6.4. Establish and improve management systems for fixed asset equipment maintenance
and patrol inspections to ensure that all assets are in good condition. The company must keep
a record of the operation of fixed assets, especially large equipment, and perform repairs and
maintenance in accordance with the requirements of the equipment and the actual production
and operation. Refer to the " Approval Flow and Authority Setting of Company " for
equipment maintenance project approval and approval. Refer to the " Approval Flow and
Authority Setting of Company " for equipment maintenance project approval and approval.
6.5. Establish and improve the safe operation process of fixed assets, especially large-scale
machinery and equipment, and strengthen the training of technical workers, use fixed assets
well and improve asset utilization efficiency.
6.6. Establish and improve the technical data filing management system such as fixed asset
manuals, warranty certificates, and maintenance records.
 6.7. Establish and improve a fixed asset preservation system. All units shall promptly go
through relevant procedures for fixed assets insurance in accordance with the relevant
provisions of the company's property insurance. In the event of an accident, compensation
should be made in time in accordance with the insurance clauses.
6. 8. Establish and improve the fixed assets inventory system, conduct two routine
inventory at the mid-year and end of the year, and report the inventory report to the superior
department as required. Internal risk control should include the inventory of fixed assets in the
basic scope of the audit of the subsidiary company.
6.9. Approval of fixed asset maintenance costs
( 1 ) A maintenance cost of ≤ RMB 5000 Yuan shall be reviewed by the financial manager
of the subsidiary company and approved by the general manager .
( 2 ) In RMB 5000 Yuan < once maintenance costs ≤ RMB 20.000 Yuan , the Ministry of
Finance and other business by the management unit, head of operations after the
approval , reported to the Finance Department and B2B responsible for approval.
7. Accounting and analysis of fixed assets
7.1. Initial measurement of fixed assets. The fixed assets are based on the actual cost at the
time of acquisition (including the purchase price, related taxes and fees, the transportation fees,
loading and unloading fees, installation fees and professional service fees that occur before the
fixed assets reach the expected usable state and are attributable to the assets. ) Perform initial
measurement; the cost of fixed assets obtained from non-monetary asset exchanges, debt
restructuring, company mergers and financial leases shall be measured in accordance with the
requirements of relevant specific accounting standards.
7.2. Follow-up expenditure on fixed assets.
7.2.1. Expenditures for technological upgrading and transformation of fixed assets shall be
demonstrated for feasibility and arranged after approval according to the prescribed
procedures. If the confirmation conditions of fixed assets are met, and the ability of fixed assets
to obtain future economic benefits is increased, and the performance of fixed assets is improved,
the cost of fixed assets should be increased, and the book value of the replaced part should be
deducted. If the renovation and transformation extend the useful life of fixed assets, the
depreciation life of the original fixed assets should be extended appropriately. Subsequent
expenditures for fixed asset reconstruction, major maintenance and routine maintenance cannot
be included in the cost of fixed assets.
7.2.2. Expenditure for reconstruction of fixed assets refers to the expenses incurred in
changing the depreciated house or building structure, extending its useful life, etc., as long-
term deferred expenses and amortized over the expected remaining useful life of the fixed asset.
7.2.3. Expenditure on major repairs of fixed assets refers to the expenses for repairs that
reach more than 50% of the value of the fixed assets obtained , and the service life of the fixed
assets after repairs is extended by more than 2 years. It shall be regarded as long-term deferred
expenses according to the fixed assets' fairness. The useful life is amortized by installments.
7.2.4. The daily maintenance costs of fixed assets are directly included in the current profit
and loss.
7.3. Depreciation of fixed assets.
The depreciation of fixed assets adopts the average life method. In accordance with the
relevant provisions of the company’s accounting policies and accounting system, without
considering impairment provisions, the depreciation period and annual depreciation rate are
determined according to the fixed asset category, expected useful life and expected net residual
value rate.
7.4. Provision for impairment of fixed assets.
Each unit shall check the fixed assets item by item at the end of the period. If the
recoverable amount is lower than the book value due to the continuous decline in market prices,
or due to obsolete technology, damage, or long-term idleness, the recoverable amount of a
single fixed asset is lower than the book value. The balance shall be provided for impairment
of fixed assets at the end of the period. Once the provision for impairment of fixed assets is
accrued, it shall not be reversed. For fixed assets with one of the following conditions, after the
company agrees, a full provision for impairment shall be made.
( 1 ) Fixed assets that have been idle for a long time and will not be used in the foreseeable
future, and have no transfer value.
( 2 ) Fixed assets that have become unusable due to technological progress and other
reasons.
( 3 ) Although the assets are still usable, a large number of fixed assets of substandard
products will be produced after use.
( 4 ) Fixed assets that have been damaged and no longer have use value and transfer value.
( 5 ) Other fixed assets that can no longer bring economic benefits to the company .
( 6 ) Depreciation of fixed assets that has been fully accrued for impairment is no longer
accrued.
7.5. Create and register fixed asset accounts, cards, and tables. The financial department is
responsible for the value management of fixed assets, registering fixed asset accounts
according to serial numbers, establishing fixed asset cards, and preparing fixed asset
statements. The detailed account of fixed assets should reflect detailed information such as its
original value, accumulated depreciation and net value.
7.6. With regard to inventory gains, inventory losses, and damage to fixed assets, first
include the assets to be processed for loss and overflow . After the reasons are found, the fixed
asset management department will sign a handling opinion and follow the " Approval Process
for the Disposal of Fixed Assets of Joint Stock Limited Companies". Level approval. After
approval, the fixed asset management department and the financial department will promptly
conduct asset disposal and accounting processing based on the approval opinions.
7. 7. For unused , no use or misuse of fixed assets, fixed asset management and user
departments should promptly put forward opinions, approval or authorized personnel
department after the implementation. For the sealed fixed assets, a special person shall be
designated to be responsible for daily management and regular inspection.
8. Inventory of fixed assets.
8. 1. Establish and improve fixed asset inventory system , in the year-end inventory and
follow the routine twice requested that the inventory report submitted to higher authorities and
so on. Internal risk control should include the inventory of fixed assets in the basic scope of the
audit of the subsidiary company.
8.2. Before the inventory, the fixed asset management department, the user department and
the financial department should check the fixed asset account book records. Form an inventory
team to take inventory of fixed assets and fill in the inventory table.
8.3. Regarding inventory gains, inventory losses, and damage to fixed assets, the fixed
asset use department and management department shall find out the reasons case by case, and
jointly prepare opinions on the handling of inventory profits and inventory
losses. Before processing , it shall be included in the profit and loss of the property to
be processed; after the reasons are ascertained, the authorized department or personnel of the
company shall approve level by level in accordance with the " Approval Process for the
Disposal of Fixed Assets of Joint Stock Company Limited". After approval, the asset
management department will promptly dispose of the assets according to the approval opinions,
and the financial department will adjust the relevant account books and records in a timely
manner to faithfully reflect the actual situation of the fixed assets.
9. Insurance of fixed assets. The company shall insure the fixed assets according to the
actual situation. The corresponding insured fixed assets shall be examined and approved
according to the prescribed procedures, and the insurance procedures shall be handled. For
major fixed assets to be insured, an insurance company shall be determined by means of
bidding. In the event of a loss in an insured fixed asset, the relevant claim procedures shall be
handled in time.
10. Disposal and transfer control of fixed assets
10.1. The company shall adopt different disposal methods for different fixed assets.
10.2. For fixed assets that have expired and are normally scrapped. The fixed asset
management department and the user department should fill in the fixed asset scrap form, and
clear the fixed asset after being approved by the authorized department or personnel (the
authorization authority shall be implemented in accordance with the relevant regulations
approved by the company's board of directors).
 10. 3. For fixed assets that have not expired or are abnormally scrapped,
the company should organize personnel to conduct technical appraisal, and the fixed asset use
department shall submit an application, indicating the reason for scrapping, estimated cleaning
costs, recoverable residual value, and estimated sale value Wait.
10.4. For fixed assets to be sold or transferred out of investment, the relevant department
or personnel shall apply for the original price, depreciation, estimated useful life, used life,
estimated sale amount or transfer price of the fixed asset, etc., and report the authorized
department or personnel shall be sold or transferred after approval.
10. 5. The disposal of fixed assets should be handled by other departments or personnel
independent of the fixed asset management department and the user department. For the
disposal of fixed assets with a unit value of more than 500,000 yuan, a qualified intermediary
agency shall be hired to conduct asset evaluation. And adopt a collective review and approval
system, and establish a collective review and approval record mechanism.
10.6. The company’s lease or lending of fixed assets shall be handled by the fixed asset
management department in conjunction with the financial department after being approved in
accordance with relevant regulations, and signed a contract agreement to stipulate related
responsibilities such as maintenance, tax liability, rent and other related responsibilities. The
related expenses incurred in renting or lending fixed assets shall be recorded in the account in
time.
10.7. For the internal transfer of fixed assets, the internal transfer form of fixed assets
should be filled out to clarify the relevant matters, and the relevant procedures should be
processed in a timely manner after the approval of the authorized person in charge. The value
of fixed asset allocation is reviewed and approved by the financial department.
10.8. Where the disposal of fixed assets involves the change of property rights, the
formalities for the change of property rights shall be handled in a timely manner.
11. Fixed asset accounting system control.
11.1. The company shall distinguish between financial leasing and operating lease in
accordance with the provisions of the unified national accounting standards system, and clarify
the approval and control procedures for fixed asset leasing business based on the transfer of
risks and rewards.
11.2. The financial departments at all levels of the company shall inspect and analyze fixed
assets with the fixed asset management department at least at the end of each year. Inspection
and analysis include regular checking of fixed asset sub-ledger and general ledger, and timely
analysis and adjustment of differences. The analysis and adjustment should be disclosed in the
annual financial summary report.
11.3. Financial departments at all levels are responsible for the value management of fixed
assets, register fixed asset accounts according to serial numbers, establish fixed asset cards,
and prepare fixed asset statements. The detailed account of fixed assets should reflect detailed
information such as its original value, accumulated depreciation and net value.

5. List of related systems

"The People's Bank of China Payment and Settlement Measures"
Ministry of Finance " Accounting Standards for Companies "
Ministry of Finance "Internal Accounting Control Standards - Fixed Assets"
(Caibanhui [2004] No. 23 )

6. Relevant information of main control points

Requisition approval form, asset transfer form, fixed asset card, fixed asset register, fixed
asset physical management ledger, fixed asset detailed account, detailed table, fixed asset repair
cost detailed account, maintenance and repair plan, insurance contract text, daily inspection
recording.