All fixed assets are long-term, but still in use, even after major repairs they need to be modernized and replaced by other means.That is happening depreciation for different reasons.
Depreciation represents the loss in value and consumer qualities in the process of continuous operation or long periods of inactivity.This process can be a natural, logical, and depend on the conditions of storage, the rules of operation of fixed assets and the rate of technological progress.
are the following kinds depreciation :
· Physical
· Moral (partial and full)
· Social
· Environmental
So physical depreciation occurs when the lost value of the fixedfunds due to damage to the technical properties, such as animal disease, pipeline corrosion, the destruction of a bridge or a building in the process of long-term operation and adverse environmental factors (rainfall, poor animal care).
Depreciation is determined depending on the technical condition and service life. degree of depreciation depends:
· load during operation
· on the quality of the equipment
· on the qualifications of workers serving means
· on manufactured equipment repair
· how is protected by the very basic means
Moral depreciation distinguish two kinds.When the lost value of fixed assets due to the fact that there are cheaper similar to the basic means to replace them, in which productivity increases dramatically.Therefore, the use of obsolete plant and equipment will slow down production itself and to cause its own backlog in the market.An example is the replacement of natural stones for tools on the artificial at the same performance.These tools are cheaper in production and old tools become obsolete and become economically inefficient, and therefore simply worthless.
second type of obsolescence associated with the emergence of productive Bole similar funds in the market.For example, the constant improvement of computers, laptops, replacing the pager to a cell phone.New computers are more productive and technical parameters are more economical.
When moral depreciation, without waiting for the rated life, quickly loses its value and importance due to the fact that far behind in terms of technical performance and economic efficiency of the new equipment has just appeared.
When the social deterioration of equipment lost value because of the fact that there are more modern, comfortable and safe model.
Environmental deterioration is a result of tightening environmental standards.This is especially pronounced in the air when you want to permanently overhaul and change planes.
When revaluation using the original data and the residual value for the calculation of the degree of deterioration of equipment at the plant. degree of depreciation determined by the ratio of accumulated depreciation to a certain date to the total asset value on the balance sheet at the same date, expressed as a percentage.The closer to zero the rate, the less wear and tear.
The wear shows how equipment from a financial point of view to replace the cook, that is depreciated over the period of work.Sinking fund the company used to replace worn-out equipment with new, and in terms of technical progress and to expand the range of plant and equipment.
