Depreciation of fixed assets of the enterprise: concept and types

All the activity of an enterprise depends entirely on the resources or funds at its disposal that are known to be not limited. The fund of the organization includes cash, equipment used in the production process, as well as human resources. Over time, equipment, for example, is physically worn out and obsolete, respectively, its cost is falling. In this case, we should talk about such a concept as depreciation of fixed assets or resources, implying the gradual loss of any capital good of its original value. Accounting for depreciation of production resources is an important component of accounting for fixed assets of the enterprise. Its management is in the competence of accountants, employees of economic and financial departments, managers of the enterprise.

Types of depreciation of fixed assets

Physical wear implies the gradual wear of the main means of labor in the process of their constant exploitation during the manufacture of the products manufactured by the enterprise. Depreciation of fixed assets or enterprise resources when using them is a natural and economically justified phenomenon. However, accelerated deterioration of resources, for example, machines, contributes to their poor maintenance, use for other purposes, storage in unsuitable for similar purposes premises. In this case, we speak of physical deterioration of the second kind.

The amount of physical depreciation of the enterprise's resources depends on:

- their quality;

- the degree of their loading in 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 can be not only the loss of consumer qualities over time, but also their moral wear. Such depreciation of fixed assets can be associated with the appearance of similar, but cheaper and more modern means of labor.

As an example of moral depreciation, one can mention the typewriters used several decades ago to write newspaper articles and literary works. Today, it is unlikely to find even one journalist or writer using such a device. In place of more convenient and multifunctional computers came.

At modern enterprises for the production of a particular product, a part of the duties of a person is performed by specialized machinery. Moral wear of fixed assets is always associated with the development of technical progress. The use of new modern equipment positively affects the overall production efficiency, allows the production of the maximum number of products in a shorter period of time.

As already mentioned, the production costs associated with the physical and moral obsolescence of the enterprise's capital resources are managed by specialists who manage finances. We can not fail to mention such a notion as the depreciation coefficient of fixed assets, showing to what extent the replacement of obsolete resources with new, more efficient ones can be financed in the future. Such a ratio is calculated on the basis of the balance sheet data.

Amortization is the process of transferring the value of the main production resources as they lose their original value and value by the value of the products produced with their help. From the accounting point of view, the coefficient of depreciation of resources (funds) is the ratio of the amount of depreciation to the initial value of these resources. It is believed that the company operates with low efficiency and a high level of costs, if the depreciation rate of its resources is more than 50%. Such a production may well be considered unprofitable.