The company is a special and rather complex system. It combines various resources: labor, material, monetary. Costs act as one of the most important factors that influences decision-making related to management activities at the enterprise.
The importance of cost analysis
Achieving goals in the commercial sphere is always directly related to costs. An entrepreneur cannot be certain that a particular decision is correct if the company has not carried out an analysis of costs and production costs. This work is aimed at identifying the likely opportunities that can be used to improve the efficiency of the use of all resources available in the organization. Cost analysis allows you to give a higher estimate of profitability and profit indicators.
Depreciation and amortization of fixed assets
In the transition to market relations, the problem of increasing the effectiveness of the use of the assets and capacities of an organization is central. The entrepreneur should have a clear idea of the value of each component of fixed assets, their moral and physical wear and tear, the factors that affect their implementation. Knowing this, it is possible to identify the techniques and areas that contribute to improving the effectiveness of the use of assets and capacities of the company.
Depreciation of fixed assets of the enterprise
The use of certain techniques contributes to a significant reduction in the costs of the organization. One of the effective tools to achieve this goal is the depreciation of fixed assets. The calculation begins on the 1st of the month following the period in which the object was accepted for tax (accounting). It is terminated from the first day of the month, which goes after that, during which the object was completely written off or he dropped out of the category for any reason. The process of depreciation of fixed assets is a systematic transfer of the value of labor resources to the product produced by them.
Depreciation and amortization of fixed assets are of particular importance in ensuring the efficient operation of a commercial company. There are a number of general provisions characterizing the asset management approach in question. First of all, it should be said that the depreciation of fixed assets represents a certain amount. Its size should be equal to the replacement (initial) value of assets. Depreciation reflects the moral and physical deterioration of fixed assets. During the useful life of the transfer of value does not stop. Exceptions are cases of transfer of the object in accordance with the decision of the head of the company for conservation for more than three months or for its restoration, the term of which is more than a year. Depreciation of fixed assets is performed regardless of the performance of the company in the reporting period. Reflects the amount in the accounting of the corresponding time interval. Ways of depreciation of fixed assets do not apply to assets whose consumer properties remain unchanged over time. These include, in particular, land and areas of nature management. Depreciation charges for fixed assets that are not involved in the activities are reflected at the expense of sources of the organization, formed from the profit remaining at its disposal.
There are different methods of calculating the depreciation of fixed assets. They are governed by the Regulations on Accounting. Item 18 contains a list in which the following types of depreciation of fixed assets are presented:
- Linear option.
- Write-off of cost in relation to the volume of services, works, goods.
- The use of decreasing balance.
- Write-off of the cost of the total amount of the years of useful life.
For tax accounting in art. 259, d. 25 NK stipulates that organizations apply nonlinear and linear depreciation of fixed assets. The first method is not allowed with respect to structures, buildings, transmission devices, the useful life of which is more than 20 years. When choosing one or another option, with the help of which the depreciation of fixed assets of an enterprise will be carried out, the taxpayer cannot change it during the entire period of transfer of funds.
In this case, the annual amount, which reflects the depreciation of fixed production assets, is formed according to a certain rule. It is formed in accordance with the determined difference between the portable value and the funds transferred before the reporting period for the transfer began. At the same time, the depreciation rates of fixed assets are taken into account. They consist of two parameters. In their formation, a coefficient is used that reflects acceleration and useful life.
Depreciation of fixed assets in this case is carried out on the basis of the portable value of the object and the ratio of the actual indicators of the volume of services, works, goods that were released in the current time period to the resource of the object. The latter should be understood as natural indicators of the amount of products that can be released during the entire operational period of an object according to the technical documentation.
Write-off by sum of numbers
In this case, the costs of depreciation of fixed assets are transferred evenly over the entire operational (useful) life of the asset object. The amount of portable cost per month is determined by two elements. The first is the depreciation value of the object, the second is the rate established in accordance with the useful life. In tax accounting there is no concept of annual indicator of the amount transferred. In this regard, the monthly depreciation of fixed assets in this case is performed taking into account the useful life, which is expressed in months.
The linear scheme assumes a uniform distribution of sums over the years. If depreciation of fixed assets is used to reduce the balance, then most of the assets will be transferred during the first years of operation of the asset. In subsequent years, revenues will gradually decline. It becomes obvious that if the depreciation of fixed assets will be carried out using a proportional write-off, then with an increase in the annual output of products (works, services), the amounts of the portable value will be increased. When conducting a comparative analysis of various methods for the implementation of depreciation charges, it becomes clear that the most economically feasible, but not in all cases the most profitable and possible, is the proportional movement of funds. If it is more expedient for the organization to write off the book value of the object as quickly as possible, then it is better to use the transfer option in accordance with the sum of the numbers of years of its useful life. As for large fund-intensive organizations, for them, most likely, the method of decreasing balance will be the most rational.
The advantage of this option is that at the initial stage of the transfer of funds, you can use the acceleration mechanism. Nonlinear write-off involves the transfer of value in two stages. At the first stage, depreciation is performed in the manner described above, at which an indicator of 80% of the value of the object is achieved. From that month following the period during which the amount reaches the 20% of the original price, the funds will be redirected in a certain order. In particular:
- The residual value is recorded as the base value, which will be used in determining further amounts.
- The amount of the monthly depreciation relative to the object is established by dividing the base value by the number of months that remain until the end of its useful life.
With its use is accelerated depreciation of fixed assets. This option allows you to quickly write off property at the cost of production. Due to this, the taxable base of payment on the organization's profit will be reduced. In the economic practice of various countries, this method of depreciation is considered as the fastest way to update fixed assets and a mechanism to reduce inflationary losses. Its main advantage is the rapid reimbursement of a substantial amount of expenses due to the time factor. However, this policy, which uses accelerated depreciation, provokes an overestimation of costs. This, in turn, contributes to the increase in the price at which the realization of the production goods (services). As a result, in Russia the practice of accelerated depreciation is currently very insignificant. Until now, the area of commercial activity of a small business was considered to be the most common use of this option of transfer of value.
Reducing the labor intensity of goods (works) and increasing the productive level can be achieved today in a variety of ways. The most important and promising of them include the automation and mechanization of industrial enterprises. Of particular importance is the development and further application of highly efficient, progressive technologies, as well as the modernization and replacement of obsolete equipment. Lowering the cost of production assets, mainly their active part, is particularly intense under the influence of the scientific and technological revolution. In the conditions of modern life and in the course of the development of the economic sphere, scientific and technological revolution has a huge impact on reducing the period of moral depreciation. Today, on average, this figure is within three to seven years. To reduce the cost of depreciation of fixed assets by the most rational use of them. To achieve this goal, first of all, it is necessary to analyze the results by expenditure. This event will allow you to compare the effectiveness of certain depreciation methods and come to fairly definite conclusions. Faster transfer of value differs by overestimated totals. Lowered depreciation rates significantly slow down the renewal of labor resources and slow down technical progress. Faster translation, on the contrary, contributes to the replacement of equipment. From this it follows that the accelerated depreciation of funds is most appropriate to apply when the organization needs to carry out the restructuring of fixed assets, as well as their modernization. It can also be said that the purpose of such a policy is to stimulate investment. But it must be remembered that accelerated depreciation is equivalent to higher costs in the short term and lower profitability of the company. Therefore, in practice, linear write-off is often used.