Faculty of business department of accounting an assessment of fixed asset managementin the

2.12.1 Disposal Planning
Asset disposal planning involves a detailed assessment of those assets that the asset strategy 
indicates are no longer effectively meeting their service delivery required at the lows long term 
cost. This assists agencies to identify for disposal, those redundant assets that might otherwise 
reduce efficient and effective service delivery.
All agencies are required to prepare annual disposal plans as part of their total asset management 
strategic planning. Asset disposal planning involves two separate and distinct elements; the 
detailed assessment of assets identified as surplus followed by an analysis of the physical 
disposal of the assets.
Disposal planning links with service delivery by the following five stage process.
1. Assets identified of surplus to service delivery requirements are assessed in detail.
2. The advantages to government, agency and the community in divesting assets are 
assessed.
3. Opportunities for increasing asset value are identified.
4. Disposal requirements including probity considerations are identified
5. Implementation of the disposal plan and performance monitoring are in place.
2.12.2 Methods of Disposal
Disposal of asset involves identifying whether the asset can be sold or not, based on this we 
classify disposable assets in to saleable and non-saleable items. There are several possible means 
of materials disposal, for salable items we have different selling option based on the nature of the 
item, geographical location, volume and existence of bidders for the item, non salable items 
consists of fixed assets retaining no salvage or disposal valve will occasionally be discarded or 
abandoned as scrap, recyclable items, donation to charities or work creation organizations, 
destruction dumping or burying hazardous items (Barth and Beaver: 1998; 190).
15

---

Selling option; choice of the most appropriate disposal option will normally be influenced by the 
nature of the goods for disposal and by their location and market value. Goods that are kept in 
one location could be sold using appropriate method of disposal for such items auctions preferred 
and this section explains the various selling options available. It provides information on the 
benefits and problems of each option, and identifies watch points. Usually when goods are sold 
the aim is to achieve the best net return or outcome, it is generally true the most cost effective 
option for selling goods is by public auction (Lese and Dobler 1971; 427) “Auction is frequently 
used as quick and convenient method of disposing of large quantities of equipment.” For some 
classes of goods, however, auctions are not the most suitable option. Some goods are only 
required by specific company, the company may b the producer or the agent in this case private 
dealing is important.
Decisions on the disposal option should have regard to the assets in terms of: potential market 
value; other intrinsic value; location, volume, trade-in value , and environmental considerations 
(including refurbishment, reuse, recycling and hazardous goods) valuations play an important 
role in asset disposal and can help managers select the most appropriate selling option. 
Individuals within a branch that have disposal responsibilities can provide an estimate or arrange 
professional valuations to ensure that the seller’s expectations for sale are realistic (Barth and 
Beaver: 1998; 311).