Depending on the a/c a transponder fail indication will be either on the control head (an amber fail lt) or on EICAS/ECAM or both!!
The fail indication means that some part of the transponder system has failed (datalink/antenna/Tx/Rx/whatever)
If the ground readout was still good then it is most likely that the upper antenna or cable system failed. This would not affect normal squawk operation but MAY affect TCAS ops as the upper antenna is needed to provide a FULL omnidirectional transmission/reception pattern for ALL calls and SELECTIVE calls