The means of labor expended in production cannot last forever. They have an extremely unpleasant property to wear out for financial calculations. The amount spent on the elimination of depreciation is called depreciation deductions. They must be included in the cost of the finished product in order to cover the corresponding costs of the enterprise.
Instructions
Step 1
Depreciation can be both physical (loss of properties, quality of materials, etc.) and moral (obsolescence of equipment models, introduction of other technologies, changes in requirements, etc.). The deterioration of fixed assets of an enterprise is inevitable not only with their constant use, but even with complete inactivity, since in this case there is the influence of external factors, such as air, humidity, etc. There is also a third type of wear - economic, which appears as a result of external political, economic and other factors.
Step 2
The calculation of the amount of depreciation consists in determining the depreciation deductions for a given period of service of fixed assets. Depreciation deductions are the costs of restoring the working condition of fixed assets, eliminating wear and tear. These deductions are included in the cost of finished goods in order to cover the costs of restoring fixed assets. We are talking about physical wear and tear, since it is removable.
Step 3
There are several methods for calculating the amount of depreciation, but of them two main ones can be distinguished - linear and non-linear. According to the straight-line method, the annual amount of depreciation is determined based on the initial cost of fixed assets, taking into account the depreciation rates and the useful life, which is determined by the company independently according to the Classification of fixed assets.
Step 4
The formula of the linear method for calculating the annual amount of depreciation: SI = (PS * HA) / 100, where SI is the amount of depreciation, PS is the initial cost of fixed assets or one of their objects, HA is the depreciation rate.
Step 5
The non-linear method, in turn, has two subtypes: the diminishing balance method and the cost write-off method. According to the diminishing balance method, the depreciation amount is determined based on the residual value of fixed assets at the beginning of the reporting period (year) and the depreciation rate: SI = C_ost * (k * HA) / 100, where C_ost is the residual value of fixed assets at the beginning of the reporting period, k - the acceleration factor, which is independently adopted by each organization, but cannot be more than 3.
Step 6
The method of writing off the value by the sum of the number of years of useful use of fixed assets consists in determining the amount of depreciation at their initial cost and the ratio of the number of remaining years and the total number of years of service: SI = PS * T_ost / (T * (T + 1) / 2), where T_ost - the number of years remaining until the end of the service life, T - the total number of years of the useful life of fixed assets.
Step 7
Most of the enterprises, namely about 70%, prefer to use the linear method in their calculations. It attracts with its simplicity and minimum input data, which is always in the company's balance sheet.
