What is physical wear and tear? Types of depreciation of fixed assets

A feature of fixed assets and intangible assets is their repeated use. However, the time of their functioning has certain limits; it is due to their wear and time useful application. Under wear and tear fixed assets and intangible assets should be understood as their partial or complete loss of their value and consumer properties, both during operation and during their inactivity. A distinction is made between physical and obsolete depreciation of fixed assets.

Physical deterioration represents the loss of fixed assets of their production and technical qualities during operation and the influence of natural and climatic conditions. The amount of physical wear and tear on fixed assets during their use is influenced by a number of factors:

the degree of load on fixed assets in the production process;

quality of fixed assets;

peculiarities technological process and the degree of protection of fixed assets from the influence of external conditions;

qualifications of workers and their relationship to fixed assets;

quality of care for fixed assets.

To determine the physical wear and tear of fixed assets, two methods are used. One is based on a comparison of actual and standard service life or volumes of work, the other is based on data on the technical condition of the means of labor established during the inspection process.

The coefficient of physical wear and tear (AND PHY) for the volume of work can be established only for those inventory objects that have a certain productivity (machines, machine tools). This coefficient can be determined by the formula:

where AND PHYS is the percentage of physical wear and tear;

T FACT - the number of years actually used by the equipment;

T NORM - standard service life (life beneficial use);

M FACT - average quantity of products actually produced per year (actual annual productivity);

M - annual production capacity (annual standard productivity).

The physical wear and tear of individual inventory items can also be determined by their service life. This method is applicable to all types of fixed assets. Based on the assumption that physical wear and tear occurs evenly throughout the entire service life of the means of labor, the coefficient of this wear and tear can be determined using the following formula:

. (11)

Based on the nature of physical wear and tear and renewal period, fixed production assets are divided into the following groups:

structures high strength- dams, dikes, tunnels, etc. They wear out slowly and undergo partial major repairs at long intervals;

buildings, structures, machines in which individual parts wear out and are periodically restored through major repairs;

some types of machines (cars, tractors, combines, etc.), elements and parts of which, as they wear out, are subject to systematic renewal and replacement with new ones (except for main structures);

some types of structures and transmission devices (railway and tram tracks, electrical networks, etc.), the renewal of which occurs continuously, through the complete replacement of all elements and parts;

equipment, equipment and tools that are subject to complete replacement at the end of their service life.

Physical wear and tear that occurs during operation of an object is called physical (material) wear and tear of the first kind. It is predominant and determines the extent of wear, the need repair work and, to a large extent, the service life of the facility.

However, OPFs of industry wear out not only during operation, but also when they are inactive. Physical wear in this case occurs as a result of natural physical and chemical influences ( physical wear and tear of the second type); Thus, when oxidized by atmospheric oxygen, iron and steel rust, and aluminum corrodes. The size of the losses is very significant; annual losses of metal from rust reach a third of the smelted volume.

Fixed production assets undergo not only physical but also moral wear and tear.

Obsolescence manifests itself in the loss of economic efficiency and feasibility of using fixed production assets before the expiration of complete physical wear and tear. In this case, the loss of value occurs regardless of whether the fixed production assets participated in production process or not.

There are two types of obsolescence. Both of them are a consequence of technological progress. But the economic consequences of both are different, and the need to take them into account for compensation purposes is not the same. The amount of obsolescence of both the first and second types is taken into account, as a rule, during the revaluation of fixed assets. Obsolescence of the first type consists in reducing the cost of machinery or equipment due to the reduction in the cost of their reproduction in modern conditions.

The relative amount of obsolescence of the first type can be calculated using the formula:

(12)

where OF PERV is the initial cost of the instrument of labor;

OF VOSST - replacement cost of the instrument of labor.

Obsolescence of the second type due to the creation and introduction into production of more advanced and economical types of machines and equipment.

When considering obsolescence of the second type, partial and complete wear and tear, as well as its hidden form, are distinguished.

Partial obsolescence- this is a partial loss of use value and value of the machine. Its gradually increasing dimensions in individual operations can reach such values when it turns out to be advisable to use the machine in other operations, in other production conditions, where it will still be quite effective.

Complete obsolescence- this is a complete depreciation of the machine when its further operation in any conditions is unprofitable. There is a likely situation where unprofitable operations are still possible, but they are implemented on more productive machines. An outdated car is dismantled for spare parts or scrapped.

A Hidden Form of Obsolescence implies the threat of depreciation of the machine due to the fact that the task for the development of new, more productive and economical equipment has been approved.

The traditional interpretation of obsolescence considers only those changes in use value that lead to changes in economic efficiency. However, the use value of tools of labor is characterized both by the quantity and quality of products produced with their help, and by the working conditions that they provide. Underestimation of social factors impoverishes the content of the concepts of “use value” and “obsolescence” of technology.

Change social characteristics means of labor can be identified as a relatively independent form of movement of their use value, and the decrease in these characteristics can be defined as social wear and tear.

The amount of social wear and tear on the means of labor is determined by the degree of discrepancy between the social characteristics of a given means or a given set of means of labor from their socially normal level.

This discrepancy may be due to two reasons:

due to the physical wear and tear of this means of labor, its social characteristics have changed (for example, safety has decreased, harmful emissions have increased, dustiness of the workplace, etc.) - social form of physical wear and tear,

the very level of socially normal social characteristics has changed (for example, workplace illumination standards have become more stringent, maximum permissible concentrations harmful substances or other norms) - social form of obsolescence.

The social form of both physical and moral wear and tear together constitutes a single concept of social wear and tear. Thus, the concept of “social wear and tear of means of labor” has relative independence and plays a significant role in the analysis of socio-economic processes occurring during the renewal of the production apparatus.

Depending on the nature of the impact of new equipment and technology on a person (directly in the workplace or indirectly, through the environment), two types of social wear and tear can be distinguished: actual social and environmental. Actually social wear form caused by the emergence of new technology that improves working conditions, as well as changes in the level of socially normal norms (primarily in terms of working conditions). Environmental wear form caused by the emergence of new technology, which, to a lesser extent than the previous one, has negative impact on the environment, as well as tightening standards and restrictions on the degree and nature of the impact of production on the environment.

The varieties of social forms of wear and tear are determined by the internal heterogeneity and multidimensionality of social wear and tear as a form of movement of the use value of means of labor. The environmental form of equipment wear has a certain specificity. If the actual social form is associated with the divergence of working conditions from their socially normal level at a given workplace, then environmental wear and tear sometimes does not directly affect the local characteristics of workplaces, but is associated with global consequences.

Environmental wear and tear, while having certain specifics, nevertheless has much in common with social wear and tear itself, and can be considered within the framework of a single social form. Consideration of different types of social wear and tear leads to the conclusion that it is more economically feasible to prevent pollution environment and create progressive working conditions in production from the very beginning, rather than deal with the consequences of unfavorable conditions.

In the process of functioning of fixed assets, they reach the limit of physical and moral wear and tear and the need to replace them with new ones. The mechanism for transferring part of the value of fixed assets to a newly created product is called depreciation and allows, by the time of complete wear and tear, to accumulate funds for reproduction.

All activities of an enterprise completely depend on the resources or funds at its disposal, which, as we know, are not unlimited. The organization's fund includes cash, equipment used in the production process, and over time, equipment, for example, physically wears out and becomes obsolete, and accordingly, its value decreases. In this case, we should talk about such a concept as depreciation of fixed assets or resources, implying the gradual loss of some capital good of its original value. Accounting for wear and tear is an important component of the enterprise. Its management is the responsibility of accountants, employees of economic and financial departments, and company managers.

fixed assets

Physical wear and tear implies the gradual wear and tear of labor during their constant use during the manufacture of products manufactured by the enterprise. Depreciation of fixed assets or resources of an enterprise during their use is a natural and economically justifiable phenomenon. However, the acceleration of wear and tear of resources, for example, machine tools, is facilitated by their poor repair maintenance, improper use, and storage in premises unsuitable for such purposes. In this case, we are talking about physical wear and tear of the second kind.

The amount of physical wear and tear on an enterprise’s resources depends on:

Their qualities;

The degree of their loading during the production process;

Quality of care for these resources;

Features of the production process;

Professionalism of employees working with resources.

The reason for the decline in the value of material goods may be not only their loss of consumer qualities over time, but also their obsolescence. Such depreciation of fixed assets may be associated with the emergence of similar, but cheaper and more modern means labor.

As an example of obsolescence, one can cite the typewriters used several decades ago for writing newspaper articles, and today it is unlikely that one will be able to find at least one journalist or writer using such a device. More convenient and multifunctional computers have replaced them.

On modern enterprises For the production of a particular product, part of a person’s responsibilities is performed by specialized equipment. fixed assets are always associated with the development of technical progress. Use of new modern equipment in a positive way affects the overall efficiency of production, allows you to produce maximum amount products in a shorter period of time.

As already mentioned, production costs associated with the physical and moral obsolescence of the enterprise’s capital resources are under the responsibility of specialists managing finances. It is impossible not to mention such a concept as the depreciation rate of fixed assets, which shows to what extent the replacement of obsolete resources with new, more efficient ones can be financed in the future. This ratio is calculated based on balance sheet data.

Depreciation is the process of transferring the cost of basic production resources as they lose their original cost and value to the cost of the products produced with their help. From an accounting point of view, the depreciation rate of resources (funds) is the ratio of the amount of depreciation to the original cost of these resources. It is considered that an enterprise operates with low efficiency and high costs if the wear rate of its resources is more than 50%. Such production may well be considered unprofitable.

During operation or inactivity, fixed assets are subject to wear and tear. Factors that determine the depreciation of fixed assets are presented in Figure 2.1.

A distinction is made between physical and moral wear and tear. Physical wear and tear is determined by the fact that, while participating in the production process, fixed assets gradually lose their consumer value, their mechanical and other properties change.

Different kinds fixed assets wear out in different terms. The amount of physical wear and tear on fixed assets depends on the intensity and nature of their operation, storage conditions, etc. The higher the load on them, the faster they wear out. For example, stationary machines and equipment have less wear and tear compared to mobile or portable ones. Significantly less wear and tear on machines and equipment operated by highly qualified workers.

Figure 2.1 - Factors determining the depreciation of fixed assets

To assess the degree of physical wear and tear of fixed assets, the expert method and the service life analysis method are used. Expert method based on a survey of actual technical condition object. Service life analysis is based on a comparison of the actual and standard service life of the corresponding objects.

Obsolescence is understood as a decrease in the value of fixed assets before the end of their service life due to a decrease in the costs of their reproduction, as new types of fixed assets begin to be produced cheaper, have higher productivity and are technically more advanced. Therefore, the use of obsolete machines and equipment becomes economically unprofitable as a result of their low productivity and high cost.

There are two forms of obsolescence. The first is characterized by a decrease in the cost of reproduction of the means of labor. In this case, machines of the same design are produced cheaper and transfer less cost to finished product. The second form of obsolescence is associated with the introduction of new, more advanced means of labor, the use of which gives greater economic effect.

The determining factor of obsolescence is scientific and technological progress. Almost all fixed assets are subject to obsolescence, but to the greatest extent - working machines. The replacement of structurally obsolete, but still serviceable machines with new ones should be based on a detailed, comprehensive economic calculation, since premature classification of equipment as obsolete entails unjustified material losses.

The time of onset of obsolescence and its degree are determined by a number of different factors and, above all, the characteristics and scale of production.

Machines and equipment, the use of which becomes unprofitable in some production conditions, can be successfully used in others. In this case, we can talk about partial obsolescence of the equipment.

Thus, obsolescence of fixed assets can be complete or partial. Losses from complete obsolescence can only be eliminated by replacing obsolete machinery and equipment with new, more advanced and cost-effective ones. However, in short term It is not possible to completely replace obsolete equipment. In some cases, improving existing equipment and machinery is more effective than replacing it. Therefore, one of the rational directions for increasing the technical level of labor tools and reducing losses from obsolescence is the modernization of machinery and equipment.

Losses from partial obsolescence can be eliminated as a result of modernization and reconstruction of obsolete types of fixed assets, that is, technical renewal, as well as the use of partially obsolete equipment to perform work where it remains cost-effective.

Losses from obsolescence can be significantly reduced by maximizing the accelerated use of existing equipment.

The degree of depreciation of fixed assets is determined by the following indicators.

Physical deterioration ():

where is the amount of accrued depreciation, thousand rubles;

Initial cost of fixed assets, thousand rubles.

Obsolescence of the first form ():

where is productivity new equipment;

Performance of old equipment.

The tendency to wear out is inherent in many types of property accounted for by the company, including fixed assets. What types of depreciation of fixed assets there are and how to determine it will be discussed in the publication.

Concept and types of depreciation of fixed production assets (FPAs)

OPF are assets designed to be used in production for a long time (more than 1 year) and wear out during operation.

Wear and tear is considered to be the gradual loss of an object’s consumer qualities and, accordingly, its value. It happens in different ways. Some objects wear out due to obsolescence and dilapidation of constituent materials, mechanical wear, metal fatigue under the influence of production processes, natural phenomena and other factors, and others - due to loss of expediency of use and reduced economic efficiency in application. And since production assets wear out completely various reasons, then this phenomenon is classified according to them.

Based on the listed criteria, the types of depreciation of fixed assets include physical and moral wear and tear.

Obsolescence of fixed assets

Obsolescence of the OS is revealed in the depreciation of the OS as a consequence of the emergence of technical innovations, sometimes long before the end of the SPI. A distinction is made between 1st and 2nd order obsolescence.

The 1st category includes wear and tear caused by an increase in labor productivity in industries producing pharmaceutical products. This process leads to a reduction in the cost of manufactured objects that already have increased competitiveness due to lower prices.

Obsolescence of 2nd order fixed assets occurs as a result of the creation of the most cost-effective fixed assets, the emergence of new facilities that ensure increased production productivity.

Obsolescence can be partial or complete. Depreciation is recognized as partial, representing a shared loss of the consumer value of the object. Depending on the specifics of production, partial obsolescence of an object can be prevented by using it in other operations where efficiency will be higher.

Complete obsolescence is considered to be the complete devaluation of an object. In such cases, its use in production becomes unprofitable.

Physical wear and tear of fixed assets

Physical wear and tear of the OS means loss of use value. Distinguish between productive and unproductive wear. Productive wear is characterized by loss of value, which is the result of operation; non-productive wear and tear is an invariable attribute of objects under conservation for various reasons, such as impossibility of use, natural aging, etc.

Physical wear and tear can be complete or partial. When complete, OS objects are replaced by new assets, since their service life has expired and the cost of the OS has completely transferred into the price of manufactured products. An example is capital construction, when a constructed building replaces a worn-out one. Partial physical deterioration assumes the possibility of further operation of the facility, carrying out repair work, reconstruction, if appropriate, or carrying out assessment work to determine the percentage of wear and tear of the facility and establish the possibility of its operation or sale.

Wear calculation methods

The degree of physical wear and tear of fixed assets depends on factors such as intensity and duration of operation, characteristic features OS designs and operating conditions. We will look at methods for calculating the wear and tear of buildings, since they are the ones that most often require a professional assessment.

Special literature on assessment describes 5 methods for calculating the physical deterioration of buildings. These are the methods:

reimbursement of expenses;
chronological age;
effective age;
expert;
breakdowns.

Let's look at the features of each of them.

Cost compensation consists of equating the amount of wear and tear to the cost of eliminating it, which is an excellent justification for the amount of wear and tear. The disadvantage of the method is that it is labor-intensive to calculate, especially for large buildings.
When using the chronological calculation method, the formula is used:
And physical = B x / B ss x 100, where B x is the actual age of the object, B ss is the service life of the building according to the standard.

Let's calculate the physical wear and tear of the building, example:

Let us determine the wear and tear of a building that has served for 750 months with a standard service life of 1200 months.

And physical = 750 / 1200 x 100 = 62.5%

The advantage of the method is the simplicity of calculation, but it does not take into account repairs and replacements that occurred during operation, which often happens in practice. Therefore, this method is considered effective for calculating wear and tear in the first years of operation of the OS; if a building is more than 10 years old, it should not be used.;
Calculation by the effective age method has 3 variations:
And physical = V e / V ss x 100%, where where V e is the effective age of the object, i.e. the expert evaluates the structure by its appearance.

And physical = (In ss - In ost) / In ss x 100%

And physical = (1 – V ost / V ss) x 100%, where V ost is the remaining service life of the building.

Substituting the initial data of the previous example into the formulas and adding the expert’s estimate of 720 months, we obtain the following values:

And physical = 720 / 1200 x 100 = 60%

And physical = (1200 – 450) / 1200 x 100 = 62.5%

And physical = (1 – 450 / 1200) x 100 = 62.5%

The disadvantage of the method is the impossibility of convincingly justifying the effective age of the structure. There is a large error in the calculations (this can be seen from the first formula).
The expert method is based on a rating scale for determining wear and tear, proposed in the “Rules for assessing the physical wear and tear of residential buildings” VSN 53-86r. Its value is determined by external damage to the elements. This method is used by BTI employees when issuing technical passports. Wear is determined by the formula:
And physical = ∑ (I k x UV k) x 100%, where I k is the amount of wear of a certain element in the building, calculated according to the rules of VSN 53-86r, UV k - specific gravity this element in the building.

The specified legal acts describe the expert methodology in detail; we introduce only the principle of calculation. The expert method is the most commonly used.
The breakdown method proposes to establish physical wear as a whole by summing the wear values by separate groups, expressed in:
- Correctable wear and tear (delayed repairs);
- Irreparable wear of short-lived (i.e., repeatedly replaced during operation) elements;
- Irreparable wear and tear of long-lived elements (recovery of which is only possible with major repairs of the building) elements.

During operation or inactivity, fixed assets are subject to wear and tear. Factors that determine the depreciation of fixed assets are presented in Fig. 5.1.

Distinguish between physical and moral wear and tear Physical deterioration is determined by the fact that, participating in the production process, fixed assets gradually lose their consumer value, their mechanical and other properties change. Different types of fixed assets wear out at different times. The amount of physical wear and tear on fixed assets depends on the intensity and nature of their operation, storage conditions, etc. The higher the load on them, the faster they wear out. For example, stationary machines and equipment have less wear and tear compared to mobile or portable ones. Significantly less wear and tear on machines and equipment operated by highly qualified workers.

To assess the degree of physical wear and tear of fixed assets, the expert method and the service life analysis method are used. The expert method is based on an examination of the actual technical condition of the object. Service life analysis is based on a comparison of the actual and standard service life of the relevant objects

Under obsolescence refers to the reduction in the cost of fixed assets before the end of their service life due to a decrease in the costs of their reproduction, as new types of fixed assets begin to be produced cheaper, have higher productivity and are technically more advanced. Therefore, the use of obsolete machines and equipment becomes economically unprofitable as a result of their low productivity and high cost.

There are two forms of obsolescence. The first is characterized by a decrease in the cost of reproduction of the means of labor. In this case, machines of the same design are produced more cheaply and transfer less cost to the finished product. The second form of obsolescence is associated with the introduction of new, more advanced means of labor, the use of which gives greater economic effect.

Obsolescence of fixed assets occurs complete And partial. Losses from complete obsolescence can only be eliminated by replacing obsolete machinery and equipment with new, more advanced and cost-effective ones.

Losses from obsolescence can be significantly reduced by maximizing the accelerated use of existing equipment.

where Tf is the actual service life of fixed assets; TN - standard service life of the main ones.

where C a is the amount of accrued depreciation, thousand rubles; OFP - initial cost of fixed assets, thousand rubles. funds,

Obsolescence of the first form(And m1)

where OF B is the replacement cost of fixed assets, thousand rubles.

Moral attitude of the second form(I M 2)

where P n is the productivity of new equipment,

Ps is the performance of old equipment.

7. Depreciation of fixed assets. Methods for establishing depreciation charges

Wear of main production assets are compensated by gradually including their cost in the costs of production over the life of these elements of fixed assets. The process of transferring in parts the cost of fixed production assets to manufactured products or services performed is called depreciation. To recover the cost and accumulate funds for subsequent complete replacement When fixed assets are retired, depreciation charges are made. The accumulation of funds to replace worn-out fixed assets with new ones is a condition for simple reproduction.

Depreciation deductions - funds accumulated over the service life of fixed assets for their complete restoration.

Thus, depreciation is monetary compensation for depreciation of fixed assets and intangible assets by including part of their cost in the costs of manufactured products. Depreciation is the monetary expression of their physical and moral wear and tear. It is carried out in order to completely replace the means of labor upon their disposal. The total amount of depreciation charges (A) is determined by the formula

A = Fp - Fl

where A is the amount of depreciation charges for the entire service life of fixed assets, rubles;

Фп-initial cost of fixed assets, rub.;

Fl - liquidation value of fixed assets, rub.

Depreciation deductions are made according to depreciation rates based on the book value of fixed production assets. Depreciation rate represents the amount of deductions established in a planned manner, expressed as a percentage of the book value of fixed production assets. The depreciation rate is calculated using the following formula:

N = (Fp – Fl)/ Tsl *Fp

The depreciation rate for each object of fixed assets and intangible assets is calculated as the reciprocal value of the standard service life of the object. Based on the “Regulations on the procedure for calculating depreciation of fixed assets and intangible assets” (which came into force on January 1, 2002), depreciation rates are established by enterprises independently in accordance with the useful life ranges given in this document. For example, for buildings and structures with low capital intensity, the useful life ranges from 5 to 15 years, and for high capital intensity, from 50 to 80 years. For machines and mechanisms, this period is from 5 to 30 years, and for computer equipment - from 3 to 14 years. In accordance with these periods, ranged depreciation rates are established.

Service life – the period during which an item of fixed assets or intangible assets retains its consumer properties. The standard service life is established by legal acts or on the basis technical documentation(technical passport for machines, mechanisms, equipment) and other documents.

Depreciation is calculated from the first day of the month following the month the facility was put into operation. At enterprises, depreciation charges are calculated monthly and included in the cost of production. After the sale of products, a depreciation fund is formed. The process of depreciation and simple reproduction can be represented as the following diagram (Fig. 4.1):

Figure 4.1 – Depreciation and reproduction of fixed assets

The sinking fund is one of the sources of investment of the enterprise, which ensures the simple reproduction of fixed capital. It is used for its intended purpose in all enterprises, regardless of ownership.

In the practice of calculating depreciation, two types of methods are used: proportional and regressive, or accelerated depreciation methods. The first are characterized by the fact that every year, throughout the entire period of operation, depreciation charges are calculated at the same rate based on the original cost of fixed assets. With accelerated depreciation, the bulk of the charges are concentrated in the first years of operation of fixed assets, the depreciation period is shortened, and financial conditions are created for the accelerated replacement of equipment.

Proportional methods include:

Uniformly linear;

Accrual of depreciation depending on deadline work equipment services;

Calculation of depreciation depending on production work.

With uniform linearity, the annual amount of deductions for an individual object is determined based on the initial cost and established norm depreciation. During the period of use of the object, equal amounts are accrued annually.

Amount of depreciation (annual) (Ag) at the most general view calculated for the enterprise, association, taking into account the average annual book value for each type (group, subgroup) (Fsr,j) of fixed assets and the corresponding depreciation rates (Ha i):

Where P - number of groups (subgroups) of fixed assets.

Advantages this method: uniformity of contributions to the depreciation fund; stability and proportionality in attribution to the cost of products; simplicity and high accuracy of calculations.

The other two proportional methods are variations of the uniform method and take into account specific operating conditions individual species means of labor. Depreciation is calculated depending on the work performed mainly for the rolling stock of automobile and urban transport. In the mining industry, depreciation is calculated based on standards and actually extracted minerals.

Flaws: full transfer of the value of fixed assets to the manufactured product is not always ensured; under-depreciation of labor instruments occurs; the concentration of resources necessary for rapid replacement of equipment is not ensured.

Numerous methods are used in world practice accelerated depreciation, both regressive and progressive. There are three main ones: the method of a firmly fixed service life of the means of labor, the reducing balance method, or the constant interest method, and the cumulative method, or the “sum of numbers” method.

With the first method, the period during which the cost of fixed capital must be written off to the depreciation fund is fixed.

The second method is that the amount of depreciation is calculated at twice the rate (compared to the straight-line method) from the residual value of the fixed assets. (Note 1- 14% of 24 = 3.36; 2- 14; of 20.64 (24-3.36) = 2.8; 3- 14% of 17.75 (20.64-2.8) = 2.49)

The cost of existing labor assets is written off mainly in the first years of their operation, which allows the decisive part of depreciation to be immediately used for new capital investments and equipment renewal. This method helps not only to accelerate depreciation, but also to concentrate resources in the first years of operation of the assets put into operation. However, this method does not guarantee a complete write-off of the cost of capital. Every year, the amount of accrued depreciation decreases, and depreciation extends over many years.

The cumulative method combines both first methods. The service life of labor tools is normalized and the wear rate increases in the first years of their operation.

The cumulative method provides full refund the cost of depreciable labor assets at the end of the established service life. At the same time, the decisive share of depreciation is calculated in the first two to three years.

According to current legislation, depreciation is not charged for some types of fixed assets. This applies to the housing stock, external amenities, productive livestock, purchased book publications, etc.

8 Indicators and ways to improve the use of fixed assets

To characterize and use fixed capital, a system of generalizing, cost, relative and natural indicators is used.

Indicators
generalizing	cost	relative	natural
Return on Equity, Capital productivity, Capital intensity	Product output Sales volume: - per ruble value of the active part of funds - per ruble cost of machinery and equipment - per 1 m2 of area	1.Extensive use- shift ratio - time utilization rate: calendar, routine, machine - share of non-working equipment - equipment downtime - average number of hours of equipment operation per day	Mechanical engineering - processing speed (cutting, grinding, etc.)
	Profit per ruble value:- active part of funds - machinery and equipment	2.Intensive use- power utilization factor

Return on Equity– ratio of profit to advance average annual cost fixed and working capital.

Capital productivity is the most important general indicator of the use of fixed assets. In its most general form, it indicates how effectively the industrial buildings, structures, transmission devices, power and working machines and equipment.. When calculating capital productivity, leased fixed assets are taken into account along with own ones. Only those funds that are mothballed and in reserve (within the standard) or leased to other enterprises and organizations are excluded. Return on assets is calculated at the full book value of fixed assets without deducting the amount of depreciation.

Capital productivity in general terms, this is the ratio of manufactured products per ruble of fixed production assets. Shows how much output is obtained from each ruble of operating capital.

Capital intensity– the value of the cost of fixed assets necessary to obtain a given volume of production.

Shift rate– the ratio of the number of worked machine shifts to the total number of equipment.

Equipment load factor– the ratio of machine time costs in machine hours to the useful fund of equipment operating time

Achieved level of utilization of possible productivity technological equipment measured coefficient of intensity of use of the machine park, which is determined by the ratio of the actual volume of manufactured products to the installed production capacity of the equipment.

The level of use of fixed assets can change under the influence of many factors.

Negative factors that reduce capital productivity include:

Increase in the cost of machinery and equipment per unit of useful effect due to shortcomings in the pricing system;

Lack of material interest among enterprise employees in increasing capital productivity.

The main directions for increasing the level of utilization of fixed assets are: reconstruction and technical re-equipment of enterprises; improvement of labor tools and production technology; mechanization and automation of labor; increasing the level of production organization; introduction of scientific organization of labor; improvement of management organization; external sales or involvement of high-speed equipment; equipment modernization; introduction of a system of moral and material incentives to improve the functioning of fixed assets; growth in the share of the active part of fixed assets; improvement of the pricing system.

36 The essence of investments and their classification

In order for the enterprise to successfully operate and develop in market economy, you need to constantly invest in it various means(financial, material, intellectual resources, etc.). They are used to replace fixed assets retiring due to wear and tear; modernization and major renovation fixed assets; technical re-equipment, reconstruction and new construction in connection with the expansion of the scale or development of new types of economic activity; replenishment working capital, caused by an increase in production volumes; training, retraining and advanced training of personnel; carrying out research and development work; carrying out environmental protection measures, etc. Funds allocated for these purposes are usually called investments.

Under investments refers to funds allocated for capital growth, that is, the purchase of equipment, design documentation for new types of products, construction of buildings, roads, bridges, houses, etc.

Investments are all types of financial and material resources, as well as property and intellectual values invested in objects of entrepreneurial and other types of activity. for the purpose of making a profit or social effect.

Investments made in the reproduction of fixed assets are called capital investments(capital-forming investments).

The process of formation and implementation of investment resources is called investment activities. It is a set of practical actions of citizens, legal entities and the state aimed at expanding capital, making a profit and satisfying needs. Investment activities can be carried out on the basis of private and state ownership.

Subjects of investment activities The state, domestic and foreign individuals and legal entities can act. They make their own decisions about the choice of investment objects.

Investment objects there may be fixed and working capital, securities, intellectual values, scientific and technical products, land and Natural resources. It is prohibited to invest in objects that do not meet the requirements of safety, sanitary, hygienic and environmental standards.

The owner of investment resources is called investor. Along with investors, sub-investors and participants act in investment activities.

Subinvestors - legal and individuals who organize and manage investment activities at all stages of its implementation under an agreement with the investor and act on his behalf. Participants investment activities - executors of orders or instructions from investors and sub-investors.

For accounting and planning purposes, investments are classified into various areas. Depending on their material content, they are divided into tangible and intangible.

Material investments - These are capital investments in the reproduction of fixed assets.

Intangible investments - These are funds allocated for the acquisition of rights to use land, water, minerals, trademarks, these are property rights to use inventions, know-how, etc. Their share in the total amount of investments by industrial enterprises of the Republic of Belarus does not exceed 10%.

Based on the source of financing, investments are classified into government investments, investments of enterprises and private firms, legal entities and individuals.

Based on the source of education, investments are classified into own, borrowed and attracted funds.

For enterprises own funds is the profit remaining at the disposal of the enterprise, depreciation funds and funds from the sale of retired or excess fixed assets. Borrowed and attracted funds of an enterprise include bank loans and long-term shares issued by the enterprise.

Investors participate in the investment process through both direct and indirect investment.

Direct investment - this is the acquisition of shares in enterprises engaged in development own production, shares of investment funds under a specific program. Indirect participation in the investment process is opening an account in a bank, trust company, investing money in Pension Fund or an insurance company. Banks or companies use depositors' money to issue loans to enterprises, regardless of their form of ownership, pledging to reinvest the savings entrusted to them with a profit.

The economy in market conditions requires continuous investment in updating fixed assets, expanding production, developing new types of products, and improving product quality. The technical level of production, the competitiveness of manufactured and mastered products, and the structural restructuring of industry completely depend on the activity of investors.

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