Recovery cost. Fixed assets and their valuation

Fixed assets include the OS of the enterprise involved in the production process, having a useful life of more than one year. Fixed assets in use wear out. The wear amount of the OS is partially transferred to the cost of the output.

To measure the volume of fixed assets, only natural physical units are used. This, for example, equipment units, square meters, etc. Accounting for fixed assets allows you to determine the degree of wear of fixed assets, gives a full dynamic of its practical use throughout the useful life.

In accounting, the cost of OS varies and is divided into the following types. This is an initial valuation, replacement cost And residual. Other types are also used. This is liquidation and market value.

Thus, the initial estimated value is formed from the actual costs received at the time of acquisition. It remains unchanged and permanent throughout its useful life and can only be revised when revalued or modified in the event of modernization or major repairs.

Recovery cost is the quantitative sum of costs in the form of depreciation deductions, which is necessary for the restoration of worn-out objects, calculated taking into account all the actual construction standards, standard rates, as well as the market value of material resources and the necessary labor costs.

The recoverable cost of the OS can be full or minus the accrued depreciation. Thus, the full replacement cost is calculated on the basis of the revaluation of fixed assets taking into account the accrued depreciation charges. It also takes into account both physical and moral obsolescence (wear) of the OS. Physical depreciation involves reducing the initial cost due to deterioration in physical characteristics or partial loss of characteristics under the influence of natural factors. This type of depreciation can reach from 1 to 5% of the cost of the initial assessment of the OS. Moral depreciation provides a reduction in the initial cost of 3 to 5% due to the widespread introduction of new models of equipment and individual components in the production market.

Such an assessment is unified and comparable in different periods of use, allowing analysis for subsequent volumes of investment of funds for their full reproduction or renewal. Moreover, it also makes it possible to calculate the production costs for the production and subsequent sale of products most accurately, to objectively calculate the cost of the OS in the event of their subsequent transfer to rent, and much more. In comparison with the original, the replacement cost can vary both in the large and in the lower side. These changes depend on the direction of the price for the production of installation works, on productivity and transportation costs. The recovering cost less depreciation is calculated by multiplying the depreciation factor by the full replacement cost, taking into account the revaluation carried out.

And the last. Residual value - this is part of the cost, which is not included in the cost of production in the form of depreciation.

Proceeding from this, the replacement cost of fixed assets is equal to the cost of their subsequent renovation. And the magnitude of the amount of deviation of this value from their initial assessment largely depends on the growth rates of scientific and technological progress, the introduction of innovations and the level of inflation.