In a market economy, each company owns a certain property. Without this, a company would not be able to produce goods or provide services. Fixed assets are the largest item in the non-current part of assets. Therefore, the importance of taking it into account is difficult to overestimate.
The profit of the company depends on the correct use of the property. How is the valuation of fixed assets, types of valuation and other information should know any analyst. By correctly applying the data obtained during the study, you can optimize the work of the enterprise or organization.
General concept
The property of the enterprise consists of current and non-current assets. They are used in the production process. Fixed assets include fixed assets. They are necessary for the enterprise in the manufacture of goods, the provision of services, as well as the implementation of management activities.
These funds have been in the use of the company for more than 12 months (operating cycle). The company needs an assessment of fixed assets. Types of assessment established by law. In order for property to be assigned to fixed assets, it must meet several conditions:
- The constituent elements must be involved in the production of goods, the provision of services or the performance of management activities.
- The life of such facilities exceeds 12 months or the operational period.
- The company does not plan to sell these funds.
- Such property can be beneficial in future periods.
These are determining factors for objects classified as fixed assets. It should be noted that such property transfers its value to the total costs in parts through depreciation.
Fund Components
Considering the types of valuation and accounting of fixed assets, it will be correct to pay attention to their composition. According to the all-Russian classification, such funds are divided into tangible and intangible. This helps to control.
The material group includes all production facilities, buildings for housing and the manufacture of products. It also includes equipment, machinery and equipment. The material fixed assets (depending on the specifics of the activity) include cattle, perennial plants and other objects. Land and domestic production roads also fall into this category. This list is being refined and supplemented for each sector of the national economy.
The group of intangible assets includes property without material embodiment, but profitable. The main articles of this category are research expenses, software (creation of databases, computer support). It also includes intellectual property, unique projects, developments and technologies. These categories of property are subject to ownership. Objects of intangible funds are subject to patenting. Also, fixed assets include construction in progress, expenses that will be recorded in future periods.
Classification
Considering the types of valuation of fixed assets, you need to pay special attention to their classification. The property of enterprises is assigned to one or another group based on the type of their activity (production and non-production).
The form of ownership distinguishes between state, private and other objects. Given the participation of funds in the production process, active and passive fixed assets are allocated. The latter include equipment, buildings and other property temporarily under repair, reconstruction. They can be mothballed and not used for some time.
The property may be rented or own. There is also a classification by territorial affiliation. On this basis, distinction is made between district, regional, city and state facilities.
Accounting systems
The enterprise without fail requires an assessment of fixed assets. Types of assessment are diverse. Among them, value or natural ones are distinguished. Their choice depends on the objectives of the study. A cost approach is required to analyze the structure and dynamics of funds. The monetary value of fixed assets is involved in calculating depreciation and the cost of finished goods. Such indicators are involved in the process of evaluating the performance of an enterprise.
Existing types of valuation of fixed assets will allow you to look at the property from different angles. The natural method makes it possible to study each article individually. The property is grouped in this case by technological qualities. At the same time, their characteristics and features are investigated.
Analysts draw such information from the passport data of equipment, design indicators of structures. The result of the analysis of fixed assets according to the system of natural indicators is used to calculate production capacity, as well as assess the status of each object. The accounting unit is the inventory number.
A monetary assessment allows analysts not only to find out the effectiveness of using these funds, but also to plan measures to improve the organization of financial and economic activities.
Cash valuation
Approaches to the study of fixed assets, in terms of their value, are divided into 3 main groups. This is due to the long life of the property. All existing types of valuation of fixed assets take into account the point in time. There are only three of them. The object is considered in accounting for replacement, initial or residual value. Each approach has its own specific meaning.
Accounting is based on the initial price at which the entity acquired each item. This includes transportation costs, customs payments, as well as the cost of the construction of buildings, installation work.
In order to be able to compare identical items of property created at different times, their replacement cost is taken into account. To determine it, the company reassesses its facilities. This approach does not take into account wear of equipment or other elements. Therefore, the analysis is supported by relevant data.
The study, which is carried out at residual value, involves performing a deduction from the initial value of the funds, the level of their deterioration at the date of the assessment.
Initial cost
The concept, classification, types of valuation of fixed assets should be studied in detail by analysts. The correctness of the organization and control of the property of the enterprise depends on this. In accounting, the initial cost is considered. This is the actual amount of the company's costs for the acquisition, construction and commissioning of an object.
The book value in this case is formed according to the data of supply contracts, settlements with suppliers, sellers, construction or installation organizations. This also includes documentation confirming the payment of consulting services, registration fees, state, customs duties, unreimbursed taxes and other similar costs.
The value of the funds at which they were entered in the financial statements is not subject to change. Only in special cases stipulated by law can data be increased or decreased.
Replacement cost
Existing types of valuation of fixed assets allow the possibility of analysis at replacement cost. To do this, the property is reevaluated taking into account current market conditions.
This process is unacceptable for natural objects, land plots. The company re-evaluates voluntarily. This is done to reduce the tax burden.
To identify objects and revaluation groups helps the classification of fixed assets. Types of valuation of fixed assets allow accounting as close as possible to the conditions of the company.
The replacement cost does not include depreciation of objects, but the report must be supplemented with data on it. In aggregate, this information gives the analyst, regulatory authorities to understand how much of the initial cost at the moment the equipment, buildings, etc. have saved. This figure corresponds to the amount of fixed assets that has not yet been transferred to cost. This is a complex process that requires a lot of time and effort.
Residual value
Modern types of monetary valuation of fixed assets can be performed at residual value. It takes into account the duration of the facility.
The residual value is calculated as the difference between the initial (or revalued) value and the amount of depreciation. At the end of its life, the object is withdrawn from the enterprise at a residual value.
With each year of operation, equipment, buildings, or other property that is not involved in the turnover, is aging, losing its original qualities. Depreciation may be physical or moral. In the first case, structural elements are destroyed, broken. Over time, this leads to the impossibility of their operation. Each object has its own period of use. It is determined in the process of setting the object on balance. The closer the end of the property service, the greater the physical deterioration.
Studying the types of valuation of fixed assets, it should be noted that such units of property can fully perform their functions, but still be unsuitable in modern market conditions. This is called obsolescence.
For example, the company acquired a new machine, which successfully worked for 2 years. Its service life is 8 years. But in the third year, the company acquired a completely new installation, working more productively and at lower cost. The first machine, as before, is functioning properly. But in the realities of the present, it is impractical to apply it. The equipment is outdated. Reevaluation required.
Depreciation
Studying the types of estimates of fixed assets of the enterprise, you should consider such a thing as depreciation. It is formed in the process of gradual reimbursement to the enterprise of the initial cost of equipment and other facilities. This fund is necessary to ensure the ability of the enterprise to acquire new property, update equipment.
There are several ways to calculate depreciation. It refers to the cost of production. Depreciation is charged as follows:
- A linear technique can break down an object’s value into equal parts according to its useful life. It can also be accelerated (most of the amount is compensated in the first years of operation) or slowed down (at the beginning of the term of use, a smaller part is compensated).
- Non-linear depreciation involves the calculation of funds for a certain amount less or more every year.
- The irregular system for each reporting period provides for a different amount of compensation.
The company selects different depreciation methods. This is necessary for the possibility of timely updating of fixed assets.
Market value
The concept, types and valuation of fixed assets should be considered from the position of the balance sheet and market value of property. In the first case, the sum of all objects is reflected in the accounting records according to the incoming documentation (including revaluation).
However, in today's economy, market value should also be taken into account by analysts. This is the amount of funds that an enterprise can receive when selling equipment, buildings and other objects.
The calculation of this indicator is carried out using a profitable, costly or comparative method. In the latter case, similar objects that are for sale are taken into account. The cost approach uses the amount of depreciation of a unit of fixed assets, as well as the price of its installation and commissioning. A profitable way, on the contrary, takes into account future profits that this or that object can give its owners.
Resource Efficiency
Very important information provides an assessment of fixed assets of the organization. The main types of valuation allow you to consider the structure of the property, its dynamics. Based on the research, ways to improve the company's profitability are also being developed.
To study the effectiveness of the use of fixed assets take into account both natural and value indicators. The most important factor in this case is profitability. To calculate it, profit (loss) for the reporting period is divided by the average annual amount of fixed assets. If the result is positive, valuation resources are used efficiently.
In the dynamics should also be studied the capital productivity ratio and capital intensity. Moreover, the assessment is performed for each group of property. This allows you to find constraints on development and eliminate them in the future.
Every financial analyst should know how to evaluate fixed assets. Types of valuation allow you to look at the property of the company from different perspectives. The data obtained allow us to evaluate the effectiveness of the use of fixed assets, as well as to plan future periods.