Journal of Economics

1. Concept, composition and structure of plant and equipment.
2. Methods for evaluation of fixed assets.
3. Depreciation.
4. Depreciation and amortization.
5. Indicators of the presence, movement and utilization of fixed assets.
6. Intangible assets and their depreciation.

1. Concept, composition and structure of plant and equipment.

Fixed assets – is the material and real values ​​(means of labor), who repeatedly engaged in the manufacturing process did not change their natural-material forms and transfer their value for finished goods in installments as the wear and tear.
In terms of accounting and valuation, plant and equipment are part of the property, which is used as a means of labor in the production of goods, works and services or to manage the organization for a period exceeding 12 months.

Classification of fixed assets.

In purpose and scope:

1. major production facilities;
2. major non-production facilities.

Ratio of individual groups of fixed assets at cost characterizes their structure. Structure is determined by calculating the proportion of individual groups of assets in the general population and is expressed in percentages.

2. Methods for evaluation of fixed assets.

Fixed assets are recorded in physical and value terms.

Natural essential for establishing the amount and composition of fixed assets, calculation of production capacity, the organization of repair and replacement of equipment.

Cost indicators are needed to determine the total cost of the structure and dynamics of fixed assets, calculate depreciation costs, profitability, etc.

There are 3 methods of evaluation of fixed assets:

At cost – is the sum of actual costs the organization to purchase, delivery, and bring to operational status of fixed assets.
Initial cost – this is the actual cost of creating assets. According to the original value of fixed assets are recorded and evaluated in the prices of those years when they were created.

At replacement cost.

Its residual value.

In addition, there are two types of assessment of fixed assets:

Liquidation value – the cost of the possible implementation of drop-outs, fully depreciated fixed assets.

Amortized cost – a cost that must be transferred to the finished product.

3. Depreciation.

In the operation of fixed assets subject to wear, which can be caused by the influence of both material and intangible factors.
In economic terms, depreciation – the loss of value of fixed assets.

Kinds of wear:

Physical depreciation – the loss of value due to changes in physical, mechanical, etc. property, plant and equipment.

Obsolescence is divided into:

obsolescence of a third kind – it’s cheaper labor and new means loss of value from existing instruments of labor;

obsolescence of the 2 nd kind – a loss of value due to the emergence of more productive and technically advanced new tools of labor. <Social depreciation – the loss of value due to the fact that the major new tools provide a higher level of social requirements (comfort, safety, ergonomics ) Environmental deterioration – the loss of value due to stricter standards in environmental protection.

4. Depreciation and amortization.

Depreciation – is the process of transfer of fixed assets for finished products and reimbursement of this cost in the process of selling the product.

Amortization expense – is the monetary expression of the size of depreciation, which should correspond to the degree of wear of fixed assets. Amortization expense included in cost of production.

5. Indicators of the presence, movement and utilization of fixed assets.

Fixed assets are recorded monthly in physical and value terms. In this case, the cost of fixed assets at the end of the year is determined by the balance formula.

FC = Fn + Fpost – Fvyb

Indicators movement of fixed assets:

1. Coefficient of income (I) of fixed assets:

2. Retirement rate of fixed assets:

3. Renewal ratio of fixed assets:

4. Coefficient of the elimination of fixed assets: