How To Calculate The Average Annual Cost Of Fixed Assets

Table of contents:

How To Calculate The Average Annual Cost Of Fixed Assets
How To Calculate The Average Annual Cost Of Fixed Assets

Video: How To Calculate The Average Annual Cost Of Fixed Assets

Video: How To Calculate The Average Annual Cost Of Fixed Assets
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Fixed assets are the property of the enterprise, which participates in the production process many times, while maintaining its natural form and transferring the cost to the manufactured products in parts.

How to calculate the average annual cost of fixed assets
How to calculate the average annual cost of fixed assets

Instructions

Step 1

Fixed assets are recorded in kind. It is necessary for calculating production capacity, planning a production program. Fixed assets also have a cost estimate, which is needed to determine their structure and dynamics, the amount of depreciation, and the efficiency of use.

Step 2

All fixed assets are accepted on the balance sheet at their original cost. It includes the cost of the acquisition, transportation and installation of production assets. In the process of using fixed assets, their revaluation is carried out. Its meaning is to determine the value of the property at the moment in market conditions. The difference between the original or replacement cost and the accrued depreciation is the residual value of fixed assets.

Step 3

In the course of the enterprise there is a continuous process of reproduction of fixed assets. Some of them are re-commissioned, others are retired. In this case, the receipt of fixed assets can be carried out by purchasing for a fee, new construction, concluding a lease agreement, receiving free of charge, etc. Fixed assets are being liquidated due to physical or moral deterioration.

Step 4

When evaluating fixed assets, their average annual cost is determined, which is calculated as follows:

OF cf = OF ng + OF input * n1 / 12 - OF selection * n2 / 12, where

OF ng - the cost of fixed assets at the beginning of the year, PF introduced - the cost of fixed assets introduced during the year, PF select - the cost of fixed assets retired during the year, n1 - the number of months of use of the introduced fixed assets, n2 is the number of months during which the retired fixed assets did not function.

Step 5

There is another method for calculating the average annual cost of fixed assets.

OF cf = ((OF ng + OF kg) / 2 + OF months) / 12, where

OF ng - the cost of fixed assets at the beginning of the year, OF kg - the cost of fixed assets at the end of the year, OF mess - the cost of fixed assets at the beginning of each month.

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