State of knowlage in the field.The theoretical and thematic study references INTRODUCTION In terms of economic behavior and their material structures, assets are grouped into: 1. tangible 2. intangible assets 3. Financial assets IAS16 Tangible assets are defined as tangible items which is owned by a unit to be used in the production of goods or provision of services to be rented to third parties or used for administrative purposes and can be used over several periods of management. These assets are knows as the tangible assets , tangible or physical assets. Defined by IAS38 Intangible assets (intangible assets) as identifiable assets , monetary , and held without support material for use in the production process or service to be rented to third parties or administrative needs. 1 | Page
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State of knowlage in the field.The theoretical and thematic study references
INTRODUCTION
In terms of economic behavior and their material structures, assets are grouped into:
1. tangible
2. intangible assets
3. Financial assets
IAS16 Tangible assets are defined as tangible items which is owned by a unit to be
used in the production of goods or provision of services to be rented to third parties or used
for administrative purposes and can be used over several periods of management.
These assets are knows as the tangible assets , tangible or physical assets.
Defined by IAS38 Intangible assets (intangible assets) as identifiable assets , monetary ,
and held without support material for use in the production process or service to be rented to
third parties or administrative needs.
In terms of area in which it is used, the fixed assets are classified in manufacturing fixed
assets, participating directly or indirectly to the production process or operating fixed assets
usedfor social marketing.
Fixed assets, also known as a non-current asset or as property, plant, and
equipment (PP&E), is a term used in accounting for assets and property 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.My paper work will reach the subject of tangible fixed assets referred as fixed assets only.
These are items of value which the organization has bought and will use for an extended
period of time; fixed assets normally include items such as land and buildings, motor
vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and machinery.
These often receive favorable tax treatment (depreciation allowance) over short-term assets.
According to International Accounting Standard (IAS) 16, Fixed Assets are assets whose future
economic benefit is probable to flow into the entity, whose cost can be measured reliably.
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Tangible assets represent assets that:
are owned by an entity to be used in the production of goods orprovision of
services, for rental to others or for administrative purposes, and
are used for a period exceeding one year
Tangible assets include: land and buildings, technical installations and machinery, other
machinery , equipment and furniture, advances tosuppliers of fixed assets tangible and
intangible assets in progress.
Land and buildings are separable assets and are accounted for separately, even when
purchased together. An increase in land value that is a building does not affect the
determination of the depreciable valueof the building.
A tangible asset should be recognized initially measured at cost or determined under the
rules of assessment of these regulations, according to how to enter the body.
Where a building is demolished to make way for another , spending demolition are
recognized by their nature , without being considered planning costs site.That also applies to
accounting treatment of the cost of depreciation value of the building demolished.
It is pertinent to note that the cost of a fixed asset is its purchase price, including import
duties and other deductible trade discounts and rebates. In addition, cost attributable to bringing
and installing the asset in its needed location and the initial estimate of dismantling and
removing the item if they are eventually no longer needed on the location.
The primary objective of a business entity is to make profit and increase the wealth of
its owners. In the attainment of this objective it is required that the management will exercise
due care and diligence in applying the basic accounting concept of “Matching Concept”.
Matching concept is simply matching the expenses of a period against the revenues of the same
period.
The use of assets in the generation of revenue is usually more than a year- that is long
term. It is therefore obligatory that in order to accurately determine the net income or profit for
a period depreciation is charged on the total value of asset that contributed to the revenue for
the period in consideration and charge against the same revenue of the same period. This is
essential in the prudent reporting of the net revenue for the entity in the period.
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Net book value of an asset is basically the difference between the historical cost of that
asset and it associated depreciation.Apart from the fact that it is enshrined in Standard
Accounting Statement (SAS) 3 and IAS 16 that value of asset should be carried at the net book
value, it is the best way of consciously presenting the value of assets to the owners of the
business and potential investor.
How should the changing value of a fixed asset be reflected in a company's
accounts?
The benefits that a business obtains from a fixed asset extend over several years. For
example, a company may use the same piece of production machinery for many years, whereas
a company-owned motor car used by a salesman probably has a shorter useful life.
By accepting that the life of a fixed asset is limited, the accounts of a business need to
recognise the benefits of the fixed asset as it is "consumed" over several years.
This consumption of a fixed asset is referred to as depreciation.
There are 3 categories od depreciable fixed assets:
Property
Plant ,animals, means of transport
Ecquipment, furniture
What is the Useful Life of a fixed asset?
An asset may be seen as having a physical life and an economic life.Most fixed assets
suffer physical deterioration through usage and the passage of time. Although care and
maintenance succeed in extending the physical life of an asset, typically it will, eventually,
reach a condition where the benefits have been exhausted.
However, a business may not wish to keep an asset until the end of its physical life.
There may be a point when it becomes uneconomic to continue to use the asset even though
there is still some physical life left.
The economic life of the asset will be determined by such factors as technological
progress and changes in demand. For purposes of calculating depreciation, it is the estimated
economic life rather than the potential physical life of the fixed asset that is used.
What about the Residual Value of a fixed asset?
At the end of the useful life of a fixed asset the business will dispose of it and any
amounts received from the disposal will represent its residual value. This, again, may be
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difficult to estimate in practice. However, an estimate has to be made. If it is unlikely to be a
significant amount, a residual value of zero will be assumed.
The cost of a fixed asset less its estimated residual value represents the total amount to
be depreciated over its estimated useful life.
Accounts for fixed assets211 Freehold land and land improvements
2111 Freehold land
2112 Land improvements
212 Buildings
213 Plant and machinery, motor vehicles, animals and plantations
2131 Plant and machinery
2132 Measurement, control and adjustment devices
2133 Motor vehicles
2134 Animals and plantations
214 Fixtures and fittings
281 Depreciation of tangible assets
EVALUATION OF FIXED ASSETS
Fixed assets are assets that generate future economic benefits and held for more than a
year. They should be valued at cost or production cost, in compliance with sections 68 and 70
in OMFP 3055/2009.Future economic benefit is the potential to contribute directly or
indirectly , the flow of cash or cash equivalents to the entity. Potential can be a productive , as
part of the entity's operating activities.
How fixed assets are valued, at historical cost or replacement cost? Historical cost
gives only the cost at which it was purchased whereas replacement cost gives us the cost that
will be incurred to actually purchase the machine in the present year?
Fixed assets are valued at cost less depreciation if they put to use regularly, i.e., in the
normal course of business.
2. If the asset is acquired in exchange of securities, the Fair Value (FV) securities. If
that is not ascertainable, the FV of asset is acquired.
3. If the asset is acquired in exchange of another asset, the FV of the asset given up. If
that is not ascertainable, the FV of asset acquired.
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The value of asset-based analysis of a business is equal to the sum of its parts. That is
the theory underlying the asset-based approaches to business valuation. The asset approach to
business valuation is based on the principle of substitution: no rational investor will pay more
for the business assets than the cost of procuring assets of similar economic utility. In contrast
to the income-based approaches, which require the valuation professional to make subjective
judgments about capitalization or discount rates, the adjusted net book value method is
relatively objective. Pursuant to accounting convention, most assets are reported on the books
of the subject company at their acquisition value, net of depreciation where applicable. These
values must be adjusted to fair market value wherever possible. The value of a company’s
intangible assets, such as goodwill, is generally impossible to determine apart from the
company’s overall enterprise value. For this reason, the asset-based approach is not the most
probative method of determining the value of going business concerns. In these cases, the asset-
based approach yields a result that is probably lesser than the fair market value of the business.
In considering an asset-based approach, the valuation professional must consider whether the
shareholder whose interest is being valued would have any authority to access the value of the
assets directly. Shareholders own shares in a corporation, but not its assets, which are owned by
the corporation. A controlling shareholder may have the authority to direct the corporation to
sell all or part of the assets it owns and to distribute the proceeds to the shareholder(s). The
non-controlling shareholder, however, lacks this authority and cannot access the value of the
assets. As a result, the value of a corporation's assets is rarely the most relevant indicator of
value to a shareholder who cannot avail himself of that value. Adjusted net book value may be
the most relevant standard of value where liquidation is imminent or ongoing; where a
company earnings or cash flow are nominal, negative or worth less than its assets; or where net
book value is standard in the industry in which the company operates. None of these situations
applies to the Company which is the subject of this valuation report. However, the adjusted net
book value may be used as a “sanity check” when compared to other methods of valuation,
such as the income and market approaches.
How Accountants Value Assets
The assets of a firm are measured and reported on in a firm’s balance sheet. In general,
the assets of a firm can be categorized into fixed assets, current assets, intangible assets and
financial assets. There seem to be three basic principles that underlie how accountants measure
asset value:
An Abiding Belief in Book Value as the Best Estimate of Value : Accounting
estimates of asset value begin with the book value, and unless a substantial reason to do
otherwise is given, the historical cost is viewed as the best estimate of the value of an asset.
A Distrust of Market or Estimated Value : When a current market value exists
for an asset that is different from the book value, accounting convention seems to view this
market value with suspicion. The market price of an asset is often viewed as both much too
volatile and easily manipulated to be used as an estimate of value for an asset. This suspicion
runs even deeper when values are estimated for an asset based upon expected future cash flows.
It is better to under estimate value than over estimate it : When there is more
than one approach that can be used to value an asset, accounting convention seems to take the
view that the more conservative (lower) estimate of value should be used rather than the less
conservative (higher) estimate of value. Thus, when both market and book value are available
for an asset, accounting rules often require that you use the lesser of the two numbers.
Item Principales governing measurement Measurement Issues
Fixed Asets Fixed assets refer to tangible assets with long lives. Generally accepted accounting principles in the United States require the valuation of fixed assets at historical costs, adjusted for any estimated loss in value from the aging of these assets. The loss in value is called depreciation.
The accounting depreciation of an asset follows mechanistic rules — straight line (where an equal amount is written off each year) or accelerated. It bears no resemblance to economic depreciation. In the presence of inflation, the use of historical cost can result in significant under valuation of older fixed assetsThe asset value has little or no relationship to the earning power of the asset.
Tangible assets entails, on one hand, knowledge of the situation of these assets in
terms of contribution to the revenue streams generated by the enterprise, and on the other
hand,estimating the appropriate methods, depending on the evaluator's position,
observing those assets as operating in or outside exploitation.
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REEVALUATIONIn finance, a revaluation of fixed assets is a technique that may be required to
accurately describe the true value of the capital goods a business owns. This should be
distinguished from planned depreciation, where the recorded decline in value of an asset is tied
to its age.
Fixed assets are held by an enterprise for the purpose of producing goods or rendering
services, as opposed to being held for resale in the normal course of business. For
example, machines, buildings, patents or licenses can be fixed assets of a business.
The purpose of a revaluation is to bring into the books the fair market value of fixed
assets. This may be helpful in order to decide whether to invest in another business. If a
company wants to sell one of its assets, it is revalued in preparation for sales negotiations.
Reasons for revaluation
It is common to see companies revaluing their fixed assets. It is important to make the
distinctions between a 'private' revaluation to a 'public' revaluation which is carried out in the
financial reports. The purposes are varied:
a) To show the true rate of return on capital employed.
b) To conserve adequate funds in the business for replacement of fixed assets at the end
of their useful lives. Provision for depreciation based on historic cost will show
inflated profits and lead to payment of excessive dividends.
c) To show the fair market value of assets which have considerably appreciated since
their purchase such as land and buildings.
d) To negotiate fair price for the assets of the company before merger with
or acquisition by another company.
e) To enable proper internal reconstruction, and external reconstruction.
f) To issue shares to existing shareholders (rights issue) or for an external issue of
shares (public issue of shares).
g) To get fair market value of assets, in case of sale and leaseback transaction.
h) When the company intends to take a loan from banks/financial institutions by
mortgaging its fixed assets. Proper revaluation of assets would enable the company to get a
higher amount of loan.
i) Sale of an individual asset or group of assets.
and the carrying amount and should be recognised in the income statement. If an entity rents
some assets and then ceases to rent them, the assets should be transferred to inventories at their
carrying amounts as they become held for sale in the ordinary course of business.
IAS 16 &IAS 36 vs. OMFP 3055/2009
Between IAS 16 and OMFP 3055/2009 are a lot of similarities.Eventhough Romanian
accounting was very different from the accounting standards that most of the european
countries use as a gide .From this point of view,we were isolated,but now because of our
integration in the European Community,we slowely, but surely,adjust our ways of keeping the
books and because of that our accountind standards shape around the international standards
eventhough we keep it with some differences.
Items IAS 16 OMFP 3055
Depreciatiom method IAS 16 provides 3 types of methods that can be used: straight line method “sum-of-years digits” method Declining-balance method
It provides four methods: straight line method Units-of-production depreciation method Declining method Accelerated method
Leasing contract of fixed assets
The cost of an asset(fixed asset) held by a tenant in a financial lease contract is determined based on the characteristics presentedin IAS 17
The cost of the asset can be accounted by the owner ither it’s a financial or operational lease contract
Tangible asset recognition criteria
IAS 16 presents 7 criteria on witch we can recognize tangible assets
3055 OMPF shows no tangible asset recognition criteria mentioned but rather which groups of assets that must be considered by companies
Evaluation rules IAS 16 says that, if no active market, the company may use the models to determine fair value (ie replacement cost model)
in1752 OMPF says that the assets for which there is no active market are estimated at amortized cost.
Residual value It defines residual value as the estimated value of the asset at the end of its useful life
In 3055 OMPF not define "residual value", so it pays full value of the assets
Depreciation in matters of cost
IAS 16 allowes the deduction of residual value deduction (if it can be estimated reliably ) and discontinuation of depreciation when it exceeds the carrying value.
The entire cost of assets is depreciated
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Personal contributions. Draft improvement and deepening
My personal contribution is given by an application made in the case of the company
DB Schenker-Romtrans, wich is the subsidiary of DB Schenker,a logistic company bu also it
provides to the customer with the transportation of the merchandise by all means:land, sea and
air.
The regional experience within Romania combined with the most efficient land
transportation network in Europe is a strong combination. DB Schenker helds the number one
position in European Land Transport for years now. Thanks to this unique constellation of DB
Schenker and Romtrans your cargo will arrive at its destination exactly at the scheduled time.
On the right track ...
DB Schenker Romtrans has terminals in Oradea, Curtici, Arad, Timisoara, Cluj-
Napoca, Bucharest, Iasi, Galati and Constanza which all have their own train interconnections.
Even the Russian broad gauge is used at Iasi and Galati. These locations will be reinforced to
be used for logistics projects for downstream rail transportations.In the year 2008 alone, more
than 1 million tons were transported nationally and cross-border by the Romanian DB Schenker
subsidiary and Romtrans.
... to the Black Sea
The own transshipment terminal in the harbor Constanza on the Black Sea plays a key
logistical role for DB Schenker Romtrans. It acts as the interface for shipments between the
river Danube and the sea and also happens to be integrated within the Romanianland
transportation network. Steel, wood, cereals and project freight belong to the most important
transhipment goods in the harbor.
Prepared for your logistics needs
Optimal logistics processes and flexibility of costs are key-factors in the success of
many businesses. Rarely, however, does a logistics provider come with the relevant experience
coupled with the required storage capacity to put contract logistics concepts into practice like
DB Schenker Romtrans does it two times in Bucharest, Cluj, Arad and Timisoara. The entire
warehousing package including all required additional services is now an integral component of
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our service portfolio. Your logistics concepts are drafted by our logistics specialists step by step
with you. This cooperation guarantees the successful and reliable implementation of your
logistics concepts.
DB Schenker stands for the transportation and logistics activities of Deutsche
Bahn and has over 91,000 employees in some 130 countries. DB’s Transportation and
Logistics Division holds top positions worldwide in the industry.
The logistics division of DB is the world’s second largest transportation and logistics
service provider based on sales and performance. In financial year 2010 the transportation and
logistics specialists generated revenues of around 18.9 billion euros, approximately 55 percent
of the DB Group’s revenues. Through its Transportation and Logistics Division, DB holds top
positions in global air and ocean freight and has Europe’s most extensive land transport
network and the rail expertise of Europe’s largest rail freight company.
With around 2,000 locations in the world’s most important economic regions, DB’s
logistics division has a global network geared toward customer service, quality and
sustainability. The transportation and logistics experts offer customers tailored, continuous and
cross-carrier door-to-door solutions as well as additional logistics solutions along the entire
value-added chain.
DB Schenker comprises the DB Schenker Rail and DB Schenker Logistics Business
Units. Following the 2010 economic downturn, DB Schenker is once again on the path to
growth and success in all areas – from rail to contract logistics.
Categories of Fixed Assets
12000 licences
21000 land
22000 constructii
23000 equipments
24000 camioane si motestivuitoare
24010 cars
24040 computers
24050 ecipamente de birou
24060 inventories < 1 800 lei
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25000 investment
26000 fixed assets in leasing
These accounts are actually accounts from the german accounting and because of
this,the code of each category of fixed assets are german accounts to exist a mutual
understanding between both german and Romanian accountants
Development of income
Year to 31 Dec 09 31 Dec 08 Change1
Item €000 €000 %
Total income 38 370 36 473 +5.2Operating income (3 046) (3 219) (–5.4)Cost of materials –18 544 –17 166 + 8.0Personnel expenses –10 583 – 9 913 + 6.8Other operating expenses – 2 723 – 2 795 – 2.6Total expenses – 35 777 – 33 578 + 6.5EBIT 2 593 2 895 –10.4Financial result –786 – 879 –10.6Profit before taxes on income 1 807 2 016 –10.4Taxes on income – 486 – 300 + 62Net profit for the year 1 321 1 716 – 23
Total income rose notably and was driven by the favorable development of
revenues.After making adjustments for the major acquisitions, total income rose by 2.1%, or €
768 million. Development of revenues, in particular, had a notable effect on the change .
Development of other operating income had a reverse impact and, after adjusting for major
acquisitions made, was even lower than the comparable same year-ago figure (€ –327 million).
This is especially due to the lower number of special items during the year under review. Last
year this figure still contained extensive effects of € 646 million arising from the sale of
holdings. Opposite effects were generated by: the sale of our holding in Arcor during the year
under review, which led to € 243 million in other operating income; and the sale of a holding in
1 The change is calculated as X 1−Xo
Xo∗100
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DB Schenker Rail Scandinavia with € 13 million, as well as the special item related to the
settlement of a conflict with the Frankfurt airport for € 56 million.
Increases in personnel expenses and the cost of materials reflect, in particular,burdens
arising from the wage settlement and the, on average, significantly higher costs for energy. In
addition, significant acquisitions made during the year under review also pushed expenses (€ –
498 million and € –361 million, respectively). After being adjusted, cost of materials rose by
5.1% and personnel expenses by 3.1%. Exchange rate effects noted in our international
business activities had a dampening impact on expenses in this area.
Depreciation taken during the year under review was slightly below the previous year’s
figure, although after adjustments for the major acquisitions made the decline was a bit higher
at 4.2%.
Other operating expenses noted for the year under review were higher than the previous
year’s level. The € 233 million recorded for this item was mainly due to changes arising from
major acquisitions made. After being adjusted, they remained at last year’s level.
The dynamic growth of volume sold noted by the domestic air transport segment in the
first half of 2009 in comparison to the same year-ago period was dampened by sharply rising
prices for aviation fuel and the shrinking economy in the second half.The pace of growth in the
low-price airlines segment decelerated significantly as these carriers responded to reduced
demand by restricting their offers and decommissioning aircraft.
BALANCE SHEET
Non-current assets were valued at € 42,353 million, or 0.7% (€ + 307 million) higher
than the value at the end of the previous year (as of December 31, 2009: € 42,046 million).
Property, plant and equipment remained at € 39,976 million (as of December 31, 2009: €
38,069 million). The increase was primarily driven by an increase in intangible assets (€ +124
million) due to taking over intangible assets and goodwill as part of acquisitions, and the share
of investments accounted for using the equity method (€ +124 million) due to the addition of
the companies to the scope of consolidation and the adjustment of the pro rata equity value.
Current assets moved in the opposite direction as their value declined as of December
31, 2008 by 9.9%, or € 643 million to € 5,840 million (as of December 31, 2009: € 6,483
million). This change was driven by the decline in cash and cash equivalents on hand (€ –670
million) due to the reduction of financial debt that took place during the year under review,
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lower trade receivables (€ –127 million ) especially due to the contraction noted for the DB
Schenker Logistics business unit. Structurally, this resulted in a slight shift towards non-current
assets. Major changes noted on the equity and liabilities side of the balance sheet during the
year under review were changes in equity and financial debt. Mainly due to the profit
development equity rose by 11.0 % or by € 1,202 million to € 12,155 million (as of December
31, 2007: € 10,953 million). The equity capital ratio increased correspond - ingly further to
25.2%. Non-current financial debt fell notably by 13.2 % or € 2,145 million as of December 31,
2010. Current financial debt moved in the opposite direction and grew by 51.0 % or € 936
million. However, total financial debt declined notably.Within the structure of our debt –
including the Federal Government’s interest-free loans shown for infrastructure financing – the
share of total assets represented by noncurrent liabilities declined correspondingly as of
December 31, 2010. In contrast, the percentage of current liabilities increased slightly as of
December 31, 2010.
Bucharest13%
Constanta11%
Arad30%
Oradea8%
Galati7%
Iasi3%
Giurgiu2%
Valea lui Mihai2%
MOL 1 CT SUD24%
Turnover
Turnover on different subsidiaries at the level of the country