Professional Documents
Culture Documents
Instructor:
Sir.Shaham Ahmed
Group 8:
Financial Accounting
EFU LIFE INSURANCE
Contents
Acknowledgement.......................................................................................................................................3
Project Scope...............................................................................................................................................3
Depreciation Method...................................................................................................................................3
About Company..........................................................................................................................................4
EFU the Beginning:.....................................................................................................................................4
EFU Group..................................................................................................................................................4
Definition of Fixed Assets & Assets............................................................................................................5
Definition Asset:..........................................................................................................................................5
Definition Fixed Asset:................................................................................................................................5
Difference between assets and fixed assets..................................................................................................6
What is depreciation?..................................................................................................................................6
Depreciation Journal Entries:......................................................................................................................6
Depreciation Methods:................................................................................................................................6
High level process description.....................................................................................................................7
EFU Life Insurance used Method................................................................................................................7
Straight-line Method of Depreciation Formula............................................................................................8
Policies and procedures...............................................................................................................................8
Disposal of Fixed Assets.............................................................................................................................8
Method of Disposal.....................................................................................................................................8
Reason for Disposal of fixed assets in EFU Life Insurance.........................................................................8
System Inventory Report.............................................................................................................................8
Depreciation schedule September 2016.....................................................................................................10
Fixed Assets Management GUI.................................................................................................................11
Notation.....................................................................................................................................................12
Fixed Assets – Acquisition (Flow Chart....................................................................................................13
Explanation............................................................................................................................................14
Fixed Assets – Disposal (Flow Chart).......................................................................................................15
Explanation............................................................................................................................................16
EFU LIFE INSURANCE
Acknowledgement
We take this opportunity to express our profound master and deep regards to “Almighty Allah”
for helping us out throughout the project. Then to our guide (Sir Shaham Ahmed) for his
exemplary guidance, monitoring and constant encouragement throughout the course of this
Project. The blessing, help and guidance given by him time to time shall carry us a long way in
the journey of life on which we are about to embark.
We also take this opportunity to express a deep sense of master to our parents, brother, and
friends for their constant encouragement without which this Project would not be possible.
Project Scope
This Project Report is about fixed assets management of Efu life insurance. Report should
include pages of:
About Company.
Which Assists they are using & How many Depreciate Rate Use Specific Assets
Graphic user Interface
Asset Register Screen Shots
Depreciation Method
This report also provides the Assets details, Acquisition of Fixed Assets, the depreciation
method, Assets recognition criteria and disposition of Fixed Assets
EFU LIFE INSURANCE
About Company
Efu Life Insurance Company
EFU the Beginning:
In 1932 in Calcutta, Mr. Ghulam Mohammed, who later became Governor General of Pakistan,
established an insurance company with H.H. Aga Khan and H.H. Nawab of Bhopal. The
company was named Eastern Federal Union Insurance Company Ltd. It was registered in
Calcutta and operated in undivided India and Burma. Its business was both General and Life
Insurance.
At the time of independence of Pakistan in 1947, EFU (as the company was called), found a new
country and rapidly established itself as a progressive and innovative insurance company. It
provided the emerging insurance industry the leadership, the manpower and the drive needed to
grow in a situation where at that time three-fourths of insurance business was held by foreign
companies
By 1961, EFU had become the flag bearer of Pakistan’s insurance industry on the world
stage, and the largest life company in Afro-Asian countries (excluding Japan) under the
leadership of our late chairman Mr. Roshen Ali Bhimjee. It remained so until 1972 when
Life Insurance industry in Pakistan was nationalized. From that time onwards, EFU
operated solely as a general insurance company and was subsequently renamed EFU
General Insurance Company Limited
EFU Group
EFU LIFE INSURANCE
Fixed assets are initially recorded as assets, and are then subject to the following general types of
accounting transactions:
Periodic depreciation (for tangible assets) or amortization (for intangible assets)
Impairment write-downs (if the value of an asset declines below its net book value)
Disposition (once assets are disposed of)
A fixed asset appears in the financial records at its net book value, which is its original cost,
minus accumulated depreciation, minus any impairment charges. Because of ongoing
depreciation, the net book value of an asset is always declining.
A fixed asset does not actually have to be "fixed," in that it cannot be moved. Many fixed assets
are portable enough to be routinely shifted within a company's premises, or entirely off the
premises. Thus, a laptop computer could be considered a fixed asset (as long as its cost exceeds
the capitalization limit).
A fixed asset is also known as Property, Plant, and Equipment
EFU LIFE INSURANCE
What is depreciation?
Depreciation is the systematic reduction in the recorded cost of a fixed asset. Examples of fixed
assets that can be depreciated are buildings, furniture, leasehold improvements, and office
equipment. The only exception is land, which is not depreciated (since land is not depleted over
time, with the exception of natural resources). The reason for using depreciation is to match a
portion of the cost of a fixed asset to the revenue that it generates; this is mandated under the
matching principle, where you record revenues with their associated expenses in the same
reporting period in order to give a complete picture of the results of a revenue-generating
transaction. The net effect of depreciation is a gradual decline in the reported carrying amount of
fixed assets on the balance sheet.
Depreciation Methods:
There are various methods that can be calculate depreciation expense for the period; the method
used should reflect the asset's business use.
Chart of Accounts is the group of G/L accounts used to classify revenue, expenses, assets, and
liabilities. Every fixed asset has sub-ledger account where depreciation and other costs are
posted. Postings to this account result in postings to reconciliation accounts and funding sources
responsible.
Details of Assets that Efu Life Insurance possesses are shown in table below.
GL Code Description Depreciate Rate Net BV
41011 Furniture & Fixture 10% 128,554,514
41014 Computers 30% 46,056,010
41012 Officer Equipment 10% 39,901,465
41013 Vehicles 20% 237,790,012
41016 Generator 10% 124,400
Book Value of all assets as of 31 dec2016 455,302,012
Method of Disposal
The primary methods of disposal include sale by public auction or tender, sale by private treaty,
trade-in and write-off, and letting. One method which is often overlooked is the sale or transfer
of assets to other government departments.
Notation
S. No. Symbol Description
Explanation
The process starts when request for purchase of a fixed asset is raised by concern
department.
It passes through concern approval hierarchy. These processes however will be
controlled manually.
Purchase Order for the said fixed asset is made. By now the requisition has already
been approved. However the document will once more pass through an additional
approval to finalize all the information in the system, before printing and sending the
Purchase Orders to supplier.
Upon Receiving Delivery from Supplier, an A/P Invoice will be prepared in the
system by finance department. This will also trigger an alert to create Fixed Asset
Master Data.
Relevant Finance person will first create a master data for that Fixed Asset and then
prepare Acquisition.
Payment will be recorded through Outgoing Payment routine when payment became
due.
EFU LIFE INSURANCE
Explanation
For fixed Assets disposal, relevant department will intimate Sales/Marketing department.
Sales department will request bids for the disposal of Fixed Assets from Customers.
After receipt of Quotations, they select Customer and enter Sales Order which will route
through a pre-defined approval hierarchy to Finance. Finance will finally post the
document in the system.
Then, Finance will enter Retirement of Fixed Assets in system.
Then, A/R Invoice will be prepared on the basis of Delivery Challan and Finally,
Payment will be received from Customer.