The state of fixed assets reflects their technical suitability for further exploitation. Worn-out fixed assets often need urgent or major repairs, modernization, can cause interruptions, downtime in the production process and product defects. Therefore, it is important for enterprises to monitor their condition by calculating special indicators.
The main indicators that are used in assessing the condition of fixed assets are the depreciation rate and the shelf life rate.
Wear factor
Depreciation is the loss of its physical, moral and economic properties by fixed assets. Depreciation also depends on depreciation groups and codes of the All-Russian Classifier of Fixed Assets (OKOF). Depreciation deductions are a value expression of the degree of wear and tear of the means of labor. They are charged monthly during the calendar year, depending on the useful life of fixed assets and are included in the cost of finished products, work performed or services rendered. This is the process of recoupment of the company's financial resources invested in fixed assets.
The depreciation ratio is calculated by dividing the accumulated amount of depreciation (depreciation) by the original or replacement (based on the revaluation results) value of fixed assets. The resulting value can be multiplied by 100%, then the wear will be expressed as a percentage of the total number of fixed assets, conventionally taken as 100%. This ratio shows how much of fixed assets is worn out and is calculated at the beginning and end of the calendar year.
Expiry factor
The rate of usefulness of fixed assets is the opposite of the rate of depreciation. It is calculated as the ratio of the original (replacement) cost to the accumulated amount of depreciation (depreciation). The result can also be multiplied by 100%. This ratio shows the share of non-worn fixed assets. The indicator is calculated at the beginning and end of the reporting year.
The usability factor can be calculated by subtracting from one or 100% the wear factor value. If you add up the wear and tear rates, you get a result equal to 1 or 100%. For example, the wear rate is 0, 3 or 30%, respectively, the wear rate will be 0, 7 or 70%. The usefulness ratio should exceed the wear rate and, in percentage terms, be more than half of the total value of fixed assets.
The enterprise must control the degree of wear and tear of its fixed assets, update and modernize them in a timely manner. Fixed assets in excellent condition are a guarantee of an uninterrupted production process, reducing the cost of finished goods and increasing the profit of the enterprise.
