Capital deductions are an important economic category. They are considered a relatively new subject of accounting activity. It is considered to be the individual investments of the owner, as well as the profit that accumulates during the functioning of the company. Deductions for capital consumption are depreciation deductions for the purchase of investment products that are used during the production of GNP for the current annual period. Just they create a difference between the available net investments and gross.
Enterprise Development Success
For the systematic development of an existing enterprise, own sources of funds are important: reserve and additional capital, profit. They are placed in a certain property, which is current and non-current assets.
Their size indicates how much increased the assets of the enterprise with an increase in its own sources of material resources of the company.
Significance of capital accounting
How are capital deductions made? What is the name of this process? Nowadays, the authorized capital is an important indicator of the organization’s work. The process of creating any legal entity should be accompanied by a determination in monetary terms of the amount of the initial capital.
He is the source of the formation of the company's own funds, which are necessary for conducting full-fledged economic and financial activities in order to count on the earning possible substantial profit.
Elements of equity
Certain deductions for capital consumption are those financial resources that are advanced in production for profit. They characterize the total amount of funds in tangible, monetary forms that can be invested in the creation of assets.
It is deductions for capital consumption that are the economic basis for the subsequent development of a commercial company. In his mathematical calculation, the difference between liabilities and assets is determined.
Types of capital
Depending on the accessory, they allocate loan and own capital. Own type determines the total value of the funds of the enterprise, which belong to it legally.
According to the source of formation, the company's own funds are divided into several groups:
- reserve;
- additional;
- statutory;
- unallocated.
They begin to form from the moment the company was established, as the founders without fail create authorized capital. The independence of the functioning of the company outside creditors depends on its size.
The listed elements are created due to the final result of the economic and financial activities of the company throughout the entire period of its existence.
Non-profit companies use a targeted financing option as equity. It represents the use of funds received by the organization, only for that purpose, which is chosen by the one who allocated material resources.
Features of the authorized capital
Deductions for capital consumption - this is an excellent airbag for the enterprise. To describe the equity capital indicated in the constituent documents, certain terms are used:
- "unit trust";
- "Statutory form";
- "Stock capital".
Features of the authorized capital
It characterizes the cost part of individual capital, which is indicated in the constituent documents of the organization. It has certain features of creation, which are associated with legal and organizational forms, therefore they call it differently.
For joint-stock companies of closed and open type, this is the sum of the nominal price of shares that are bought by shareholders. None of them are exempted from such service. Depending on the charter of the company, the form and terms of payment can be expressed in the following forms: property, cash, securities.
Pooled capital is the aggregate of limited partnership contributions that are involved in housekeeping.
Statutory fund - a set of circulating and fixed assets allocated to a company by municipal authorities or the state.
Deduction of capital consumption is an excellent option for the full development of the enterprise, its competitiveness in the modern market. They directly depend on the size of the authorized capital of the organization, as well as on the goals and subject of the enterprise.
An indivisible and mutual fund of consumer and production cooperatives is created thanks to share contributions, acts as monetary resources and other property that is used to carry out full-fledged entrepreneurial activity.
Any deductions for capital consumption are depreciation of current assets. Their value is determined individually for each organization, depends on the direction, size, sources of replenishment of the budget.
Currently, deductions for capital consumption are net investments, the ability of the enterprise to stay afloat.
Municipal and state unitary companies form a fund in a clear manner, involving the allocation by the municipal authorities and the state of circulating and fixed assets.
Some nuances
Intangible assets and tangible assets that are contributed to the authorized capital in the form of contributions are valued at a cost that is agreed between the founders. Securities and other assets are valued at an agreed value.
Certain deductions for capital consumption are something important that should not be missed in a company that dreams of a stable and systematic income.
Currency and currency values are assessed at the official rate of the Bank of Russia, which is valid for the period of payment of these values.
This is the deduction for capital consumption. The difference between the exchange rate difference and the originally laid down in the charter, “additional capital” is called.
Features of joint stock companies
In the case of the creation of a new joint-stock company, its authorized capital is formed using the issue and sale of shares. For closed joint-stock companies, shares are distributed among specific legal entities and individuals, the amount of deposits is determined individually for each shareholder. Open options for joint-stock companies are entitled to issue shares (issue) for free sale on the stock market. The value of issued securities may differ in the direction of increase or decrease from the real price.
In addition, joint stock companies have the right to repurchase shares for resale, distribution among employees or for cancellation.
Net assets of organizations
This indicator is a value that is calculated by subtracting the amount of its obligations from the total amount of the company's assets.
For example, in joint-stock companies, the assets that are accepted for calculation are:
- fixed assets, intangible assets, long-term financial injections, fixed assets, other non-current assets;
- working capital, which are reflected in the financial statements;
- value added tax on purchased values, stocks, short-term financial investments.
The liabilities accepted for offset include accounts payable and various short-term liabilities.
Conclusion
What are deductions for capital consumption, is it depreciation or net investment?
For any organization, certain deductions for capital are a way of stable activity for a long time. In addition to the authorized capital, each company has additional and reserve funds, as well as retained earnings.
Under Russian law, the creation of reserve capital is mandatory for joint ventures and joint-stock companies. The rest of the companies decide on their own creation.
Additional paid-in capital is not divided into shares contributed by specific participants. It is formed from the share premium received from the sale of shares at a price higher than the initial cost of the additional issue of shares. The additional capital also includes the exchange rate difference that was formed when the founders made contributions to the authorized capital of the company.
Share premium is the difference between the cost of selling a security and its par value.
Uncovered loss is the final financial result that has been received over the entire period of the company’s activity. It is calculated as the difference in financial results from various activities of the organization and tax payments from profit, including sanctions for violations of tax rules.
The fact of the appearance of retained earnings or uncovered loss is indicated during the reformation of the balance, carried out at the end of the reporting year. The net profit for this period is written off using them as reserve capital. Enterprises that do not have net profit for the reporting period run the risk of becoming unprofitable companies, losing their position in the financial sector, and ceasing to function.