Fixed assets are subject to physical and moral deterioration. Physical deterioration consists in the fact that fixed assets over time gradually lose their production and technical qualities and completely fail, i.e. lose their use value. For different groups of fixed assets, physical wear and tear manifests itself in different ways. For equipment, wear is expressed in a change in the shapes and sizes of individual parts and assemblies, in loss of accuracy, productivity, etc. Otherwise will be the wear of buildings and structures. Depreciation of fixed assets occurs unevenly. Some elements, such as equipment, tools, are actively involved in the production process, so they wear out faster than, for example, buildings. Despite the variety of types of physical deterioration, a single pattern can be traced in the nature of its course. At the beginning of the operation of the fixed asset facility, wear proceeds rapidly due to intensive burnishing of working bodies, then there comes a period of steady (slow) wear and tear over a long period of time and its acceleration towards the end of its service life.
There are two forms of physical wear and tear:
Mechanical wear of labor means and reduction of technical and production indicators during their operation; Destruction of inactive means of labor as a result of the influence of natural conditions (corrosion, infection of the tree with fungus).
Physical wear and tear can be partial or complete. Partial wear and tear is eliminated as a result of repairs, which are carried out in order to return the equipment to its original technical and economic properties. Complete depreciation is compensated by replacing physically worn-out fixed assets: for the active part – this is the acquisition of equipment, for buildings and structures – this is capital construction.
Obsolescence is the depreciation of fixed assets that are still physically usable. There are two forms of obsolescence.
The first is to reduce the cost of fixed assets due to a decrease in the cost of their reproduction. It is based on the growth of labor productivity, an increase in the technical equipment of manufacturing plants, as a result of which there is a reduction in labor intensity, and, consequently, a decrease in the cost of products. At the same time, tools of labor lose part of their value in direct proportion to the reduction in socially necessary costs for the production of tools of labor similar in their purpose, but fully retain their consumer properties, because with the same costs of living labor, their use allows to produce the same amount of production as new tools of labor.
The second is expressed in the depreciation of fixed assets, due to the creation of new, more perfect ones. It is based on scientific and technological progress, thanks to which more modern technology appears both in terms of basic design parameters and performance indicators. The efficiency of new tools is determined by the extent to which their use reduces the cost of living and reified labor for the production of a unit of output.
The onset of obsolescence of existing equipment is not always advisable to consider from the moment of the appearance of a new, cheaper or more productive machine for a similar purpose, the economic advantages of which are confirmed by production tests.
Moral obsolescence from a theoretical point of view does not yet indicate that there is an immediate need to replace morally obsolete equipment. Replacement can be carried out if the following conditions are met:
Where is:
CD, CN – the price of respectively obsolete and new model, rubles;
Pd, Mon – the relative value of the productivity of obsolete and new equipment;
Nad, Nan – the norm of depreciation deductions respectively obsolete and new model;
Ksmd, Ksmn – shift coefficients when using an outdated and new model;
Kzgd, Kzgn – load factors when using the outdated and new model.
Taking into account the coefficients of equipment use over time is necessary, since a new high-performance machine with a decrease in the level of its use may be economically unjustified.
Scientific and technological progress makes its own adjustments to the period of obsolescence of equipment and other equipment. It has significantly decreased and is, for example, for computer science on average 3 – 5 years.
Moral obsolescence is higher in the electronics industry compared to other industries. The creation of new and improvement of existing electronic products, the development of new directions in electronics, constant qualitative changes in products and the specifics of its production impose more and more new requirements on equipment and production areas. When devices are discontinued, existing equipment, as a rule, cannot be used for the manufacture of new electronic products, and must be completely or partially replaced with new ones.
Compensation for depreciation of fixed assets in kind is carried out with the help of repairs and replacement with new types of them, in value – through depreciation.
Depreciation is the process of gradual transfer of the cost of fixed assets to the cost of products produced with their help. Depreciation is carried out for the accumulation of funds for the purpose of subsequent full or partial restoration of fixed assets. The part of the cost of fixed assets included through depreciation in the cost of production is depreciation deductions. Depreciation deductions are determined on the basis of depreciation rates, which show how much of the value of fixed assets must be transferred to the cost of finished products (works, services) in the accounting period. The annual depreciation rate depends on the useful life or standard useful life of the depreciable property and the method of depreciation accrual.
The normative service life is determined according to the classifier, the useful life is established by the enterprise independently within the range corresponding to the depreciation group, to which the object of fixed assets used in entrepreneurial activity belongs (Table 2.2).
Table 2.2 Resource requirements by component
Grouping of depreciable property
Name of fixed asset object | Useful life range, years |
| Building. Structures, transfer devices, capital investments in land improvement. machinery, mechanisms, equipment, including communication equipment, measuring and regulating instruments and devices, working cattle. Computer equipment, office equipment, production and household equipment, tools and accessories, other fixed assets. Vehicles, with the exception of aircraft (without aircraft engines) and civil aviation aircraft engines. Aircraft (without aircraft engines) and aircraft engines of civil aviation. | 5 – 125 80 – 125 5 – 30 3 – 14 3 – 40 5 – 35 |
For objects not used in business activities, only the normative service life is established.
There are the following methods of erosion of armotization: uniform, accelerated and productive.
The uniform method involves the transfer of the value of fixed assets in equal parts during their depreciation period. It is focused on the uniform physical and moral deterioration of fixed assets.
The depreciation rate (Na) is determined by the formula:
or 
,
where: Tsi – useful life of fixed assets used in business activities, years.
Tn – normative service life of fixed assets not used in business activities, years
The annual amount of depreciation deductions is determined by making the norm of depreciation deductions and the initial cost of the fixed asset object:
Ag = On * FP / 100.
The accelerated method assumes an uneven (by year) accrual of depreciation during the useful life of fixed assets. In the first years of operation, most of the cost of the depreciation object is included in the cost of production. As the service life of fixed assets increases, the annual amount of depreciation deductions decreases. The most common methods of accelerated depreciation in foreign practice are the method of the sum of years and the method of decreasing balance.
With the sum of years method, the annual rate of depreciation deductions is determined by the formula:
where: t0 – remaining service life, years;
?t is the sum of the years of the depreciation period.
The sum of years is defined by the expression:
Depreciation deductions in year t are determined by the formula:
At = Nt * FP / 100.
In the decreasing residue method, the depreciation rate is defined as a unit divided by the useful life and multiplied by the acceleration factor (Q), which can vary from 1 to 2.5. The annual amount of depreciation deductions is determined by the formula:
Where is:? At – the amount of accumulated depreciation deductions for the entire period of operation of the fixed asset facility, rubles;
FP(c) – the initial (restored) cost of the depreciation object, rubles.
The productive method of calculating the depreciation of the fixed asset object is to calculate depreciation based on the depreciable value of fixed assets and the ratio of the resource used in the current year to the resource of the object based on its technical characteristics.
The annual depreciation rate can be adjusted by applying correction factors that take into account the operating conditions of fixed assets (aggressive environment, deviation from the established basic operating modes, etc.).
Comparative values of annual depreciation and amortization rates for different depreciation methods are presented in Table 2.3.
The data of the table show that the amount of depreciation deductions varies from year to year of useful life. Consequently, by managing depreciation (using one or another method of its accrual), it is possible to influence the amount of the cost of production and taxable profit.
The main levers of depreciation management of fixed assets are: the choice of optimal useful life, methods and methods of calculating depreciation, the use of the mechanism for indexing depreciation deductions in conditions of inflation and revaluation of fixed assets (Fig.2.1.).
The use of these levers allows you to optimize the amount of depreciation deductions as part of the cost price, depending on the competitiveness of products (works, services), demand, the need to update fixed assets.
Methods and methods of calculating depreciation are established by the enterprise independently for each object of fixed assets and are reflected in the accounting policy developed by the business entity for each financial year.
Table 2.3.
Comparative values of depreciation rates and annual
depreciation deductions under various methods
depreciation charges*
Years | Depreciation rates, % | Annual amount of depreciation deductions, million rubles. | ||||
Equidistant method | Sum of years method | Decreasing residue method | Equidistant method | Sum of years method | Decreasing residue method | |
1 2 3 4 5 6 7 8 9 10 | 10 10 10 10 10 10 10 10 10 10 | 18,2 16,4 14,5 12,7 10,9 9,1 7,3 5,5 3,6 1,8 | 20 20 20 20 20 20 20 20 20 20 | 1,6 1,6 1,6 1,6 1,6 1,6 1,6 1,6 1,6 1,6 | 2,9 2,6 2,3 2,0 1,7 1,5 1,2 0,9 0,6 0,3 | 3,2 2,6 2,0 1,6 1,3 1,0 0,8 0,7 0,5 0,4 |
* The initial cost of the fixed asset object is 16 million rubles.