The most important document for analyzing the performance of a company is the balance sheet. It allows you to understand the state of the assets and liabilities of the enterprise. Assets consist of fixed assets and current assets. And if the accounting of working capital does not cause difficulties, then fixed assets are used at the enterprise repeatedly and for a long time, which complicates the process of determining from cost. To simplify this procedure, the book value of property, plant and equipment is used.
In accounting, the book value of fixed assets is used to account for the availability and movement of their value in the company's balance sheet. The carrying amount of fixed assets that have just arrived at the enterprise is calculated based on the way they are used. For example, it can be equal to the amount of payment for the acquisition of an object and the cost of putting it into operation. When compiling the balance sheet for the following reporting periods, the carrying amount is reduced by the amount of impairment losses and accumulated depreciation. If borrowed funds were used for the purchase, then payments on loan interest for the reporting period are also taken into account. Legislative acts determine the basic rules for calculating the initial book value depending on the method of acquiring fixed assets: barter exchange, construction or manufacture, donation, share contribution to the authorized capital, transfer to trust management. These rules are clear enough not to be difficult to apply. The book value of fixed assets can change during operation under the influence of a number of factors, which sometimes can only be estimated by highly qualified specialists. These factors include: depreciation of fixed assets; change in value through changes in market prices; costs of maintenance, repair, reconstruction. These factors are taken into account by means of an annual revaluation of fixed assets, which is influenced not only by actual costs, but also by operating conditions: the number of work shifts, the influence of environmental aggressiveness, inflationary processes, fatigue of materials, duration term of use and so on. These conditions entail a change in the book value of fixed assets, which cannot be determined by standard norms, therefore, highly qualified specialists are involved in the revaluation.
