Academies Australasia: SITXFIN005 Manage Physical Assets Case Study

This assignment presents a case study focused on asset management within McLennan's Cafe, where the student, in the role of a manager, must address challenges related to asset tracking, valuation, and replacement. The assignment begins with questions on the importance of knowing organizational assets and the benefits of asset management in achieving financial, marketing, and occupational health and safety objectives, as well as minimizing waste and pollution. The student is then provided with a list of assets, purchase dates, and purchase prices, and is required to complete asset registers, calculating depreciation using the straight-line method, to determine the book value of assets over time. Furthermore, the student must calculate total asset value at a specific point and identify assets needing replacement based on their book value and expected lifespans. The assignment also includes depreciation schedules for different assets using Diminishing Value and Straight Line methods, and covers the concepts of opening and closing written down value. The student must then calculate the depreciation expense for each asset over multiple years. The goal is to demonstrate an understanding of asset management principles, depreciation methods, and the creation and use of asset registers in a business context.

SITXFIN005 Manage Physical Assets V1.0
Assessment Activity
(Formative)
SITXFIN005
Course: Manage Physical Assets
STUDENT NAME
STUDENT ID. NUMBER
ASSESSOR NAME
RESULT
INDIVIDUAL
ASSESSMENT
RESULT
ASSESSMENT
ACTIVITY C ¨ NYC ¨ FINAL
GRADE
ASSESSOR FEEDBACK
I have received the Assessment Feedback on____________________________ (DATE)
STUDENTS SIGNATURE
ASSESSOR SIGNATURE DATE
DOCUMENT CONTROL
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
VERSION DATE AUTHOR COMMENTS
1.0 29th December 2018 Emily McLennan &
Reece Thomas
 Original
ASSESSMENT INSTRUCTIONS
Assessment Overview Format: Create an Asset Register/Manual
Total Marks Students undertaking this assessment must demonstrate
competency as per the Training Package or accredited
course requirements, guidelines and rules.
Academies Australasia Polytechnic’s VET Programs
observes the following grading scheme for the below
assessment:
Competency based assessment is a process where an
assessor works with you to collect evidence of competence,
using the benchmarks provided by the unit standards that
comprise the national qualifications
Time Allocated Trainer Discretion
ASSET MANAGEMENT
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
ASSESSMENT ACTIVITY: CASE STUDY
BUSINESS DESCRIPTION
1. Develop strategies for the systematic maintenance, repair and purchase of physical
assets.
2. Monitor the condition and performance of physical assets in the workplace.
3. Coordinate financing of physical assets.
This assessment addresses the following required skills and knowledge:
SKILLS
 Critical thinking and analytical skills to evaluate complex information from varied
sources to develop strategic management approaches to physical assets.
 Planning and organisational skills to develop and implement complex and
interrelated workplace procedures, systems and schedules for physical asset
maintenance.
 Literacy skills to interpret and develop a varied range of complex business
documents.
 Numeracy skills to analyse and prepare a wide range of financial data, and to
interpret estimates and financial agreements for physical asset acquisition.
KNOWLEDGE
 Types of physical assets required by organisations in different work contexts.
 Maintenance requirements for different types of physical assets in the relevant
industry context.
 Features and benefits of different financing options for asset acquisition, including
purchase, rent, lease and hire purchase.
 Features of an assets register and techniques for its development and maintenance.
 Overview of taxation arrangements in relation to the acquisition and disposal of
physical assets.
 Specific legislation related to the management and maintenance of physical assets,
such as that relevant to vehicles or food production equipment.
 Environmental standards and requirements in relation to different physical assets.
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
PART A: CASE STUDY
BACKGROUND INFORMATION
Hi. My name is Alexander. I have just started working as the manager of McLennan’s
Café. As with any new role there are many challenges.
Let’s talk through some of the most important ones that I am about to face.
 I don’t really know how accurate our books are.
 I have no listing and am not sure what our assets are.
 There is nothing to tell me what the book value of these assets is.
 How do we know what will need to be replaced?
 How will we accommodate the cost of replacing assets?
Please help me gain a better understanding of asset management by answering the
following questions and completing the following tasks.
1. Why is it important that we know what our assets are? Explain.
It is important to know about the assets of the organization as they are source of
creation of value for the company. They help in generating revenue, increase the value
of the business and facilitate the day to day running of the business. Further, knowing
the assets helps in better utilization of assets and proper allocation of resources to
achieve higher profitability for the company and maximization of wealth for the
stakeholders.
2. How can asset management help us?
a. Achieve our financial objectives?
Asset management can help us achieve our financial objectives in the
following manner:
(i) Maximising profit through proper resource allocation;
(ii) Optimisation of resources;
(iii) Generation of employment;
(iv) Higher Revenue and utilisation of asset
b. Achieve our marketing objectives?
Asset management shall help in achieving our marketing objectives in the
following manner:
(i) Better client relationship;
(ii) Increase Sale of Financial Products;
(iii) Higher Profitability;
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
(iv) Lower Cost;
(v) Entering new market segments.
c. Meet our occupational health and safety requirements?
Asset management shall help in achieving to meet our occupational health
and safety requirement in the following manner:
(i) Clear defined rules and regulation for safety;
(ii) Maintaining necessary equipment for any hazards;
(iii) Proper plans;
(iv) Training;
(v) Proper Policies can help in recovering major costs etc.
d. Prevent waste and minimise pollution?
Asset management shall help in achieving to prevent waste and
minimize pollution in the following manner:
(i) Proper Treatment of waste before discharge into water, air or land;
(ii) Using energy efficient devices in the organization;
(iii) Using Pollution efficient devices can reduce discharge contents.
3. I have now compiled a list of our assets including their purchase dates.
ASSET PURCHASE DATE PURCHASE PRICE
(EXCLUDING GST)
EXPECTED LIFE
SPAN
Car 1 July 2017 $19,700 8 years
Espresso Machine 1 July 2017 $1,070 5 years
Furniture 1 July 2017 $23,000 15 years
Dishwasher 1 July 2017 $1,500 13 years
4. When calculating our depreciation we have used the straight-line depreciation
method. Imagine that it’s 2020.
Fill out an asset register for each of these assets.
Asset Register
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
Type Car
Estimated life 8 years Depreciation
method
Straight-line method
Date Particulars Annual
depreciation
$
Accumulated
depreciation $
Book value $
1 July 2017 Purchase 0 0 $19,700.00
30 June 2018 Depreciation $2462.5 $2462.5 17237.5
30 June 2019 Depreciation $2462.5 $4925 14775
30 June 2020 Depreciation $2462.5 $7387.5 12312.5
30 June 2021 Depreciation $2462.5 $9850 9850
30 June 2022 Depreciation $2462.5 $12312.5 7387.5
30 June 2023 Depreciation $2462.5 $14775 4925
30 June 2024 Depreciation $2462.5 $17237.5 2462.5
Asset Register
Type Espresso Machine
Estimated life 5 Depreciation
method
Straight-line method
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
Date Particulars Annual
depreciation
$
Accumulated
depreciation $
Book value $
1 July 2017 Purchase $0.00 $0.00 $1,070.00
30 June 2018 Depreciation $214 $214 856
30 June 2019 Depreciation $214 $428 642
30 June 2020 Depreciation $214 $642 428
30 June 2021 Depreciation $214 $856 214
30 June 2022 Depreciation $214 $1070 0
30 June 2023 Depreciation
30 June 2024 Depreciation
Asset Register
Type Furniture
Estimated life 15 years Depreciation
method
Straight-line method
Date Particulars Annual
depreciation
Accumulated
depreciation $
Book value $
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
$
1 July 2017 Purchase $0.00 $0.00 $23,000.00
30 June 2018 Depreciation $1533.33 $1533.33 21466.67
30 June 2019 Depreciation $1533.33 $3066.67 19933.34
30 June 2020 Depreciation $1533.33 $4600 18400.01
30 June 2021 Depreciation $1533.33 $6133.33 16866.68
30 June 2022 Depreciation $1533.33 $7666.67 15333.35
30 June 2023 Depreciation $1533.33 $9200 13800.02
30 June 2024 Depreciation $1533.33 $10733.33 12266.69
30 June 2025 Depreciation $1533.33 $12266.67 10733.36
30 June 2026 Depreciation $1533.33 $13800 9200.03
30 June 2027 Depreciation $1533.33 $15333.33 7666.7
30 June 2028 Depreciation $1533.33 $16866.67 6133.37
30 June 2029 Depreciation $1533.33 $18400 4600.04
30 June 2030 Depreciation $1533.33 $19933.33 3066.71
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
Asset Register
Type Dishwasher
Estimated life 13 years Depreciation
method
Straight-line method
Date Particulars Annual
Depreciation
$
Accumulated
Depreciation $
Book value $
1 July 2017 Purchase $0.00 $0.00 $1,500.00
30 June 2018 Depreciation $115.385 $115.385 1384.615
30 June 2019 Depreciation $115.385 $230.77 1269.23
30 June 2020 Depreciation $115.385 $346.15 1153.845
30 June 2021 Depreciation $115.385 $461.54 1038.46
30 June 2022 Depreciation $115.385 $576.92 923.075
30 June 2023 Depreciation $115.385 $692.31 807.69
30 June 2024 Depreciation $115.385 $807.69 692.305
30 June 2025 Depreciation $115.385 $923.07 576.92
30 June 2026 Depreciation $115.385 $1038.46 461.535
30 June 2027 Depreciation $115.385 $1153.85 346.15
30 June 2028 Depreciation $115.385 $1269.23 230.765
30 June 2029 Depreciation $115.385 $1384.62 115.38
30 June 2030 Depreciation $115.385 $1500 0
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
NOTE: If the final book value figure differs by a few cents from the annual depreciation
figure, it should be rounded to zero.
5. What is the total value of our assets as of 1 July 2018?
$40944.79
6. Based on the book value of these assets as of 1July 2019, which assets may need to
be replaced within the next two years? What methods can I use to work out which
assets actually need to be replaced?
ANSWERS & WORKINGS
None of the asset. However, Espresso Machine needs to be replaced in three years
Asset Register
Type Espresso Machine
Estimated life 5 Depreciation
method
Straight-line
method
Date Particulars Annual
depreciation
$
Accumulated
depreciation $
Book value $
1 July 2017 Purchase $0.00 $0.00 $1,070.00
30 June 2018 Depreciation $214 $214 856
30 June 2019 Depreciation $214 $428 642
30 June 2020 Depreciation $214 $642 428
30 June 2021 Depreciation $214 $856 214
30 June 2022 Depreciation $214 $1070 0
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
30 June 2023 Depreciation
30 June 2024 Depreciation
Further, the method that can be used to track which asset needs to be replaced in the
organization encompass the following :
(i) Declining Balance Method;
(ii) Double Declining Balance Method;
(iii) Straight Line Method;
(iv) Sum of digits Method;
(v) Annual Production Method.
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018

SITXFIN005 Manage Physical Assets V1.0
Trainer Resource: SITXFIN005 Version 1.0 © Reece Thomas & Emily McLennan, 2018