sinking fund - is now accumulated a certain amount of funds allocated for the resumption of the value of fixed capital.Accumulate funds by means of depreciation, which in turn are part of the production costs.Thus, amortization funds provide the most complete enterprise existence.They eliminate the wear process expensive equipment, transport and buildings, showing an amount of funds, focused on their recovery.
Depreciation of fixed assets
However, although the concept is still used in modern accounting, it is a rather abstract way of formation, not covered by the legal form of a special fund.Sinking fund since 1992 do not exist in practice, representing a savings deductions derivatives formed at the expense of the cost of production.Changes in the law have occurred in connection with the full-scale privatization of state property by private entrepreneurs.After that, the legislature decided to monitor technology business, which will recover depreciation of fixed assets, in a democratic environment, they are not eligible.While many modern economists today may not agree with the wording of the domestic economic issue of enterprises and organizations of Russian legislators, as charter capital of business entities in the modern economic system of such a fund Soviet enterprises in most cases formed the founders of the organization, and is drawn from the external investment environment.In this regard, management is equally an economic entity shall be liable to investors, as well as management of the plant to the Soviet government at the time.Sinking fund, in turn, do not allow to roam fantasy manager to complete, having mastered so excessive capital at the expense of dividends, as it allows a deduction of cost.However, since the legislative form of the process is not due, the investors can only more carefully analyze the investment attractiveness of the enterprise, relying on the good faith of his leadership.
Sinking fund venture
But it often happens that the company consistently leads to positive investor dividend policy.In such cases, management uses the classical method of calculating the depreciation fund.When it reflects the total value of fixed assets, moved to a manufactured product of their service life.That is the amount that would be able to fully compensate for the fixed assets wears.Volume sinking fund from a mathematical point of view, has the form:
= AF + MF KR + M + A, where:
- PV - value of fixed assets;
- KR - cost depreciation repair during this period;
- M - the cost of modernization;
- A - residual value.
