Reconciliation and valuation of property, plant & equipment

Abstract

This report has been prepared with a view to giving a reasonably reliable amount of value of property, plant and equipment of passive assets sold by Robi Axiata Ltd to edotco Bangladesh Co Ltd. Transaction has already been taken place between the two companies; agreement has been signed on 29 July 2015 giving effect from 1 March 2015. The initial transaction has been taken place based on carrying amount of Robi FAR. The main objective of this report is to show the revised carrying amount of Robi FAR based on physical verification data for each individual passive assets of towers. Revision of carrying amount has been required since there are some assets exists in Robi FAR but does not physically exists; and vice versa. Our initial effort was concentrated to develop a reconciliation report between Robi FAR and physical verification data which identified which assets of Robi FAR exactly matches with physical verification report; which assets of Robi FAR partially matches with physical verification report; and which assets of Robi FAR does not match with physical verification report. On the other hand, some passive assets have been physically found but for those assets no record exists in Robi FAR, so called “newly found assets”. For those assets existed both in Robi FAR and in physical verification report, carrying amount at 1 March 2015 has been taken from Robi FAR; for newly found assets, depreciated replacement cost approach has been applied. This approach requires data for three variables: costs of a new asset, useful life of a new assetand original capitalization date. Since the newly found assets do not exist in Robi FAR, judgment has been applied to get a reasonable capitalization date. Edotco FAR has been developed based on physical verification data provided by vendors. Initially it includes edotco asset ID, site code/location, name of assets, brand, asset class etc. The reconciliation, valuation and development of edotco FAR are one of the main parts of Site Audit & Asset Reconciliation Project (SAARP).