Depreciation is one of the most contentious issues in accounting and management.The fact that reliably determine the extent to which the fixed assets of losing their value during the production cycle is not possible, therefore, for its calculations resorting to the construction of simplified models.Meanwhile, the depreciation though is only the result of mathematical calculations significantly affect the profit of the company, and, therefore, the payment of their taxes.That is why depreciation is given such an important role in management and accounting.
calculation of depreciation, largely depends on the lifetime of the equipment.Although, that there are certain rules, it is impossible to accurately predict when equipment will need to be changed because of moral or physical deterioration.Therefore, as some are choosing life averaged maximum objective value.Even more difficult is the determination of the residual value, ie,the cost of equipment to complete the estimated useful life.It is impossible to accurately determine the status of the equipment in a dozen years, and the market situation at all is totally unpredictable.Therefore, the residual value is determined by literally "by eye".
Later calculation of depreciation made on the basis of the above data.From initial equipment cost is deducted residual, and get the amount written off in costs of the company during the whole calculated service life.Write-off of amortization can occur in various ways, and in many cases companies the right to choose the most appropriate way to them.Today, the calculation of depreciation is conducted in four main ways: linear or non-linear one of the group.
linear method assumes a uniform write-down of the equipment.This method is considered to be simplified and for the account of simple equipment and simple situations, which are not involved in the leasing, rental, etc.The total cost to be cheating, is divided into the period of operation, and the resulting amount is included in the corresponding item of expenditure each year.
use of accelerated depreciation methods based on the fact that at the beginning of the service equipment loses more of its value than in the final stages, so true reflection of the value on the balance sheet, it is necessary to reflect this trend when copying depreciation expenses.The most popular non-linear method - declining balance method.The calculation of depreciation in this way involves the use of the calculations is not the total value of the equipment, and the remainder, which is reflected on the balance sheet in the current year.That is, each year the balance will be reduced, and hence themselves depreciation.
There is also quite a rarely used method of calculation of depreciation, based on the output.First, set a specific limit on the output of the equipment, then its value is subtracted from the share, which is equal to the share of output to the set limit.
Regardless of the method, depreciation remain within the enterprise, so the use of depreciation is quite an important issue.Logically, they should be used to buy new equipment.Although many managers, indeed, perceived as a source of investment depreciation, it can also be used for payroll, procurement of raw materials, etc.Either way, you need to choose the most optimal solution for the company, as an effective approach to the depreciation issue - is the key to prosperity in the long term.
