Assessment Tasks and Instructions
|Assessment for this Unit of Competency/Cluster
|Assessment conducted in this instance: Assessment 1 2
Assessment Tasks and Instructions
|What will be assessed
|The purpose of this assessment is to assess your underpinning knowledge to complete the tasks outlined in the elements and performance criteria for this unit of competency and relating to the following aspects:
· business objectives relevant to the management of physical assets:
o providing quality products and services to customers
o adhering to:
§ codes of conduct
§ environmental sustainability philosophies and practices
o industry accreditation schemes
· types of physical assets required by tourism, hospitality and event organisations and the organisation in particular:
o computer systems
o equipment fixtures, fittings and furniture in one of the following:
§ accommodation establishments
§ commercial kitchens
§ restaurants and bars
§ storage areas
§ tourism, hospitality and event offices
§ transportation depots
o rides and games
· maintenance requirements for different types of physical assets
· considerations for long-term assessment of physical assets:
o ability to meet business objectives
o cost of maintenance over a period of time
o customer and staff feedback
o input from specialists where required
o operational efficiency
· equipment specifications to guide acquisition process:
o budget parameters
o environmental sustainability policies for the business
o floor plans
|o numbers and types of required equipment fixtures, fittings and furniture
o operational performance requirements:
§ customer traffic
§ staff usage
o types of products and services offered by the business
· formats for and inclusions of asset registers specified in performance evidence
· features and benefits of different financing options for asset acquisition:
o hire purchase
· depreciation that can be applied to different types of physical assets
· data used in the estimation of asset acquisition:
o current maintenance contracts
o estimates and quotations from suppliers
o previous contracts and costs
o published or advertised prices
· practices to support environmental sustainability using different types of physical assets.
|Place/Location where assessment will be conducted including timeframes
|DC Training Kitchen and DC Class Room
|Pen, Paper or computer, internet access Calculator
|Instructions for assessment including WHS requirements
|You are required to address all questions to achieve competence. Your trainer will provide you with instructions for time frames and dates to complete this assessment.
Once completed, carefully read the responses you have provided and check for completeness. Your trainer will provide you with feedback and the result you have achieved.
Answer the following questions below. All questions must be answered.
- How can the following business objectives influence the methods used for managing physical assets in an organisation? Provide 1 example for each:
The consideration of profitability helps organization to shape its corporate image and expand its market share. It allows organization to minimize production cost of products and stimulates development of organization profile, which becomes easier and more effective with employee incentives and product development.
The business objectives will influence methods you use for managing your physical assets.
For example, if profitability is major concern then a detailed ROI will need to be conducted, and total cost will be a significant factor in decision. In a different situation, a particular asset may be absolutely necessary in order to provide a certain product or service. In this situation total cost is less important than function of asset and ensuring that it remains operational (Yuan, (2013)).
“Organizational growth has potential to provide small businesses with a myriad of benefits, including things like greater efficiencies from economies of scale, increased power, a greater ability to withstand market fluctuations”.
“Example”: “For instance increase in revenue”.
- Providing quality products and services to customers
“All assets must be analyzed to ensure they will fit with intended usage”. “The products and services offered by a business must be considered to ensure that desired service levels and customer outcomes can be achieved”. “For example, a vehicle must be suitable for its use, e.g. if conducting off road tours then a 4wd would be most appropriate”.
- Adhering to:
- codes of conduct
- environmental sustainability philosophies and practices
“While many of these categories may simply be inconvenienced, it is an absolute necessity to consider legal requirements and impacts of any possible scenario”. “At very least, any building works will be governed by relevant Building Act, Environment Act, Disability Discrimination Act, Licensing Act and WHS Acts”.
“The converse is also true”. “Any changes to these Acts will require analysis of assets to ensure they comply”. “For example, a change to an Environment Act may require retrospective fitting of equipment or even major building works”. “Many TH&E businesses have had to fit access ramps and other facilities in order to comply with new legislation”.
- Industry accreditation schemes
“External influences may also need to be considered when making strategic asset management decisions”. “Industry Codes of Conduct and Accreditation Schemes may dictate to some degree how decision must be made”. “For example Star Ratings Australia Accommodation Classification Scheme covers a wide range of accommodation and consists of ratings from one to five stars in Australia and star offers clean basic accommodation, while five stars indicate outstanding international”
- Provide 8 examples for different types of physical assets required by tourism, hospitality and event organisations:
- Buildings and other structures
- Vehicles and vessels
- Fitness equipment’s
- Computer and other IT systems
- Flat TV screen
- Swimming pool
- Recreation equipment, e.g., pool table, rides, and games
- Espresso Machine
- List 5 physical assets relevant to your workplace or training and provide the maintenance details typically required for each:
|1. The building
|It can involve cleaning, painting, repairing cracks, inspecting, repairing, maintaining electrical systems, heating and cooling services.
|Organizing cords, updates, run regular antivirus scans, updates passwords, cleaning.
|3. swimming pool
|Maintaining pH, chlorine or salt levels, cleaning, water balance, alkalinity levels, strips tests, sanitation.
|Change oils, test lights, check fluids, engine air filter, services, wheels.
|Cleaning floors/walls, sharpen knifes, service on machinery, checklists, safe, PPE
- List 6 key aspects which must be considered for the long-term assessment of physical assets in terms of nature of requirements and necessity of acquisition. Who could be typically involved in this in terms of feedback and specialist advice?
|1. Increase efficiency of operation: ensure efficient service provision. If an asset functions at a critical point of service provision, then it will become a service bottleneck if it does not function efficiently.
2. improve quality of product or service delivery : If guests are left waiting and become unhappy with the service then they may leave, causing damage to your business’ reputation and income stream
3. satisfy customer needs and expectations: if guests can be satisfied that can enhance business’s reputation and improve marketing and enhance profits
4. meet or exceed market benchmarks: improve brand’s impression and expanding the scale of currently marketing
5. Are acceptable in the workplace safety environment: reducing the injury and damage risks of staff and equipment, and decreasing the costs of unpredictable events
6. Impact positively on the business finances: reducing the risks of finance and increasing the cash flow. then that can be the important factor for make a loan from bank
|Such as, directors, managers, main stakeholders should involve in feedback and specialist advice. then they need to discuss and consultant with different expert to address and improve currently circumstance, and enhance efficiency that can extremely improve our work and market environment, in terms of , marketing, finance, income and reputation
- The following are parameters which are used to guide the acquisition of physical assets. Provide examples and details for what should be considered, for each aspect.
Financial capacity of business operation determines the capacity in purchasing acquired assets. For example, when hotels plan to purchase motor vehicles, they may need to consider the capacity of different makes of vehicles, their usefulness and so on against availability of their financial supports. If the vehicle the operation plans to buy is over the budget, the operation may need to find alternative model that suits their money with the similar usefulness (Wanna, et.al, (2020)).
Environmental sustainability policies for the business –
Although there is already certain protection of environment enforced by governmental laws and regulations, it is advisable that any operations would take consideration of environmental sustainability to further steps. Therefore, any planned buying assets, should not be harm to environment. For, example, should the hotel plan to install air conditioners, the management may opt to purchase energy-safe model for the concern of global warming.
There is no “one size fits all” for every asset; therefore, it must be a concern over size, dimension and required condition in the installation of the asset against space and setup of the operation. e.g., to build a standard swimming pool in limited space may obstruct the hotel to utilize space to its best performance.
Auxiliary items –
There may be other items need to be acquired for the business. For example you need an oven and a stove top for your kitchen but you have limited space in the kitchen. The solution can be choosing the most needed equipment first or using combined equipment.
It is convenient to make decision in purchasing an asset than to thoroughly study its usefulness which may have been caused by the likeness of asset design or else than its usefulness. Therefore, it is advisable for the management to carefully consider the true need or suitability for that asset acquisition e.g., when a refrigerator is needed for each hotel room, rather than purchasing a complex/multifunction model for the room which is totally unnecessary, the management should choose a simple model adequate for short term stay guest.
Suitability to products and services offered –
Ensuring all assets are analyzed and they fit for intended usage. Making sure that service levels and customer desires are achieved. For example, if providing tours, then a bus will be most appropriate to hold for customers.
- Which details need to be recorded in an asset register for each physical asset?
- Name or type of asset
- Asset description e.g. supplier, make and model, serial number, location
- Purchase date
- Opening Written Down Value (WDV)
- Depreciation amount for the year
- Depreciation rate and calculation type
- Closing Written Down Value (WDV)
- Methods and proceeds of disposal
- Provide an overview of the features, advantages and disadvantages of each of the following financing options when acquiring assets:
- Hire purchase
- Appropriate method when the buyer does not have sufficient capital to pay the full asking price.
- The buyer has full use of the asset during the hiring period.
- Hire purchase is also referred to as rent-to-own, closed-end leasing, commercial hire purchase and corporate hire purchase (Vanhonacker & Verbeke,(2014)).
Hire purchase agreement includes:
- Rate of interest
- Any other clauses
- Asking price
- Purchase price
- Deposit to be paid
- Item description
○ Lower capital expenditure
○ Option to purchase after lease
○ Termination is difficult or costly
○ No full control
○ Maintenance costs aren’t controlled by business
- Most depreciable assets can be leased
- Minimum finance lease amount is normally $10,000 over terms that can range from two to five years
- Provides access to the latest equipment and technology without the associated risks of ownership
- Interest rate and repayments are fixed for the term of the contract
- Irregular or seasonal payment schedules can be considered to suit your cash flow
- Preserve your working capital with 100% financing
- Guards against obsolete equipment and offers the flexibility to respond to changing market demands
- Takes away the worry of disposing of obsolete equipment in a potentially weak resale market
- Lease rental payments may be off-balance sheet, providing scope to improve business performance ratios such as return on assets (Tanase & Oncioiu, (2018)).
- If you use the asset to generate income, rental payments may be tax deductible
- Bank owns the asset and you then lease it for an agreed term and rental amount.
- In the end, leasing usually costs you more than an equivalent loan, if only because you are always driving a rapidly depreciating asset.
- You own the product
- You can claim the tax deduction for the purchase of an asset
- A trading of money for complete ownership of the asset.
- You can use the asset at its optimum level
- You don’t need to worry about wear and tear that normally accounts in lease assets.
- Depreciation cost will be incurred by the company.
- Chances of loss or no use of asset due to new innovative technology.
- Easy to operate.
- There is usually an agreement to operate and use these assets.
- A choice of obtaining the utilization of an asset without obtaining the ownership of the asset itself through payment of regular fee to the asset owner.
- Easy to terminate and change when required.
- Cost effective. Specially, when company cannot buy the asset
- You pay for the use but you don’t get the product or asset.
- Explain the methods for calculating the depreciation of assets using each of the following methods
Prime cost method
The prime cost method, also called the straight-line method, assumes that the value of an asset decreases at a uniform rate over time. For example, if a business owner buys a piece of equipment for $5,000 that has a useful life of five years, the value of the equipment would fall by $1,000 a year under this method. The prime cost method contrasts with the diminishing value method, which assumes that assets lose the most value during the first year of ownership and successively less value in subsequent years (LIMAREV,et,al, (2019)).
Under the prime cost method (also known as the straight-line method), you claim a fixed amount each year based on the following formula: Asset’s cost × (days held ÷ 365) × (100% ÷asset’s effective life.)
Diminishing Value Method
The diminishing value method assumes that the decline in value each year is a constant proportion of the remaining value and produces a progressively smaller decline over time (Shevlin & Krajbich, (2022)).
For depreciating assets that you started to hold on or after 10 May 2006 the formula for the decline in value is:
Base value x9 days held/365) x (200% /asset’s effective life)
Where the base value for the income year in which an asset’s start time occurs is the asset’s cost. For a later income year, the base value is the asset’s opening adjustable value for that year plus any amounts included in the asset’s second element of cost for that year
- Go to the ATO website link provided below and source the information for the current simplified depreciation rules which apply
From 12 March 2020 until 31 December 2020 the instant asset write-off:
- Threshold amount for each asset is $150,000 (up from $30,000)
- Eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).
From 12 March 2020 until 30 June 2021 the Backing business investment measure provides a time-limited (15 month) investment incentive to support business investment and economic growth, by accelerating depreciation deductions. The key features of the incentive are as follows:
- The benefits are either:
○ Deduction of 50% of the cost or opening adjustable value of an eligible asset on installation. Existing depreciation rules apply to the balance of the asset’s cost
○ If you are using the simplified depreciation rules for small business, you can claim 57.5% of the cost of the asset in the first year you add the asset to the small business pool.
- Eligible businesses – businesses with aggregated turnover below $500 million
- Eligible assets – new depreciating assets (for example, plant, equipment and specified intangible assets, such as patents). The assets must be first held, and first used or first
- Provide 4 examples of sources for data to enable you to estimate reliable acquisition costs. What does this need to consider in terms of contractual obligations and ongoing maintenance?
- Closing Costs (expenses, over and above the price of the property)
- Other necessary Costs before sales taxes
Aspects to consider
- Discounts: What is the price privilege given by supplier?
- Incentives: What is extra privilege given by supplier as additional value to the asset?
- Closing Costs (expenses, over and above the price of the property): What are additional expenses that directly occur after an asset has been obtained?
- Other necessary Costs before sales taxes: Any involving cost that may occur after an asset is under possession (Nagle & Müller,(2017)).
- List 3 examples for environmental sustainability that applies to physical assets and outline the environmental and financial benefits as applicable:
|Environmental and financial benefits
|Low energy consumed electric appliance
|Reduce global warming issue and electric bill.
|Turning off unused lights and equipment
|Reduce bill and used emission.
|Use recycled water and reuse water waste
|Social responsibility to area, reduce water bill, reduce water waste
|Tree growing in the property
|Reduce heat, increase oxygen, less reliance on air conditioner and electric bill
Wanna, J., Kelly, J., & Forster, J. (2020). Managing public expenditure in Australia. Routledge. Available at , https://www.taylorfrancis.com/books/mono/10.4324/9781003116431/managing-public-expenditure-australia-john-forster-joanne-kelly-john-wanna
Yuan, Y. Y. (2013). Adding environmental sustainability to the management of event tourism. International Journal of Culture, Tourism and Hospitality Research. Available at , https://www.emerald.com/insight/content/doi/10.1108/IJCTHR-04-2013-0024/full/html
Vanhonacker, F., & Verbeke, W. (2014). Public and consumer policies for higher welfare food products: Challenges and opportunities. Journal of agricultural and environmental ethics, 27(1), 153-171. Available at , https://link.springer.com/article/10.1007/s10806-013-9479-2
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing more profitably. Routledge.
Shevlin, B. R., Smith, S. M., Hausfeld, J., & Krajbich, I. (2022). High-value decisions are fast and accurate, inconsistent with diminishing value sensitivity. Proceedings of the National Academy of Sciences, 119(6), e2101508119.
LIMAREV, P. V., LIMAREVA, Y. A., SHKURKO, N. S., Slozhenikina, N. S., Ereklintseva, E. V., & GAFUROVA, V. M. (2019). Estimating the prime cost of information products.
Tanase, A. E., Calota, T. O., & Oncioiu, F. R. (2018). The Impact of IFRS 16 on the Companies’ Key Performance Indicators: Limits, Advantages and Drawbacks. Academic Journal of Economic Studies, 4(1), 54-60.