Amortization funds - this is a certain amount of funds accumulated by the enterprise, aimed at the renewal of the value of fixed capital. Accumulated funds through depreciation charges, which in turn are part of the cost of production. Thus, depreciation funds Provide the most valuable existence of the enterprise. They eliminate the process of depreciation of expensive equipment, transport, buildings and structures, representing a volume of funds, focused on their recovery.
Depreciation deductions of fixed assets
However, although this concept is still used in modern accounting, it is a rather abstract way of formation, not envisaged in the legislative form of a special fund. Depreciation funds since 1992 in practice do not exist, representing only derivatives of accumulation of deductions formed due to the cost of production. Changes in the legislation occurred in connection with the full-scale privatization of state property by private entrepreneurs. After that, the country's legislative bodies decided that to control the technology of entrepreneurial activity, according to which the main fund will be restored , in a democratic environment they have no right. Although many modern economists today may not agree with the wording of this intraeconomic issue of enterprises and organizations by Russian legislators, since the constituent capital of economic entities in the modern economic system, like the funds of Soviet enterprises, is not in most cases formed by the founders of the organization, but is drawn from the external investment environment . In this regard, the managers of the business entity are equally responsible to the depositors, as well as the plant's management before the Soviet authorities in due time. Amortization funds, in turn, do not allow the manager's imagination to go full circle, thus mastering excessive capital to the detriment of dividends, just as it is possible to simply deduct from the cost price. However, since this process is not stipulated in the legislative form, the depositors will only have to analyze the investment attractiveness of the enterprise more carefully, hoping for the honesty of its management.
Company's depreciation fund
But often it happens that the company stably leads a positive dividend policy for the investor. In such cases, management uses the classic method of calculating the depreciation fund. When it reflects the total value of fixed assets, transferred to the manufactured product for the period of their service. That is, on that The amount that could fully recover fixed assets when they are worn out. The volume of the depreciation fund from the mathematical point of view has the form:
АФ = ПВ + КР + М + Л, where:
- PV - the value of fixed assets;
- KR - the cost of depreciation repairs during this period;
- M - the cost of modernization;
- L is the liquidation value.