Equipment wear rate. How to calculate depreciation. What is wear coefficient and what does it show?

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All fixed assets of the organization (buildings, structures, equipment) are subject to physical and moral wear and tear. It represents the transfer of the value of property to manufactured products and is called “depreciation.” Depreciation charges are determined based on the original cost of fixed assets and the duration of their operation. Just follow these simple step-by-step tips and you will be on the right track in solving your financial issues.

Quick step by step guide

So, let's look at the actions that need to be taken.

Step - 1
There are several ways to calculate depreciation of fixed assets. The simplest one is linear. You can find the annual depreciation amount if you know the initial cost of the object and the depreciation rate calculated in accordance with its useful life. For example, an enterprise purchased equipment worth 150 thousand rubles, the useful life of which is 5 years. This means that the annual depreciation rate will be 20% (100%/5), the annual amount of depreciation will be 30 thousand rubles. (150 thousand rubles x 20%). Next, move on to the next step of the recommendation.

Step - 2
You can also determine the annual depreciation amount using the reducing balance method. In this case, you must know the residual value of the object at the beginning of the period under review and the depreciation rate established based on its useful life and acceleration factor. The latter applies to certain types of machinery and equipment, the list of which is established by federal executive authorities. For example, an enterprise purchased equipment worth 150 thousand rubles. with a useful life of 5 years, a depreciation rate of 20%, an acceleration factor of 2. The depreciation rate, calculated taking into account the acceleration rate, will be 40%. In the first year of using the equipment, the amount of wear and tear will be 60 thousand rubles. (150 thousand rubles x 40%). In the second year, the amount of depreciation will be calculated based on the residual value of 90 thousand rubles. (150 thousand rubles – 60 thousand rubles). It will amount to 36 thousand rubles. (90 thousand rubles x 40%). Next, move on to the next step of the recommendation.

Step - 3
When writing off the cost by the sum of the number of years of its useful life, you can determine the annual amount of depreciation based on the original cost of the property and the ratio, the numerator of which is the number of years remaining until the end of the useful life, and the denominator is the sum of the number of years of the useful life. For example, equipment worth 150 thousand rubles was purchased. with a useful life of 5 years. The sum of the numbers of useful years will be 15 (1+2+3+4+5). The amount of depreciation for the first year will be equal to 150 thousand rubles. x 5/15 = 50 thousand rubles, for the second year - 150 thousand rubles. x 4/15 = 40 thousand rubles. etc. Next, move on to the next step of the recommendation.

Step - 4
Another way to calculate depreciation is to write off the cost of an object in proportion to the volume of products produced. In this case, accruals are made based on the volume of output in the period under review, the initial cost of the object and the volume of production that is planned to be produced using it. For example, an enterprise purchased a car worth 100 thousand rubles. with a planned mileage of 500 thousand km. During the reporting period, the car traveled 50 thousand km. Therefore, the amount of depreciation will be 100 thousand rubles. (50/500) = 10 thousand rubles.
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The coefficient is equal to the ratio of the amount of accrued depreciation to the original cost of fixed assets. The initial data for the calculation is the balance sheet.

Depreciation rate of fixed assets calculated in the FinEkAnalysis program in the block Analysis of the state of fixed assets and their reproduction as the Depreciation rate of fixed assets.

Depreciation rate of fixed assets - what it shows

Depreciation rate of fixed assets shows how worn out fixed assets are, i.e. to what extent their possible future replacement is financed as they depreciate.

Depreciation rate of fixed assets - formula

General formula for calculating the coefficient:

Calculation formula based on the old balance sheet data:

Depreciation rate of fixed assets - value

Depreciation rate of fixed assets It is advisable to consider it with the serviceability coefficient of fixed assets.

Since these indicators are often used to characterize the condition of fixed assets, we note that these indicators are conditional. The reason is the dependence of the indicator and serviceability coefficient on the method of calculating depreciation. In other words, Depreciation rate of fixed assets does not reflect the actual depreciation of fixed assets, just as the serviceability coefficient does not provide an accurate assessment of their current condition.

Despite the conventions, the indicators have analytical significance. Indicator value Depreciation rate of fixed assets more than 50% and a fitness factor less than 50% are undesirable. An accurate assessment of the indicator is obtained by comparing the value for a particular enterprise with the value of competitors, or with the average in the industry.

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Depreciation of fixed assets is a complete or partial loss of value and serviceability; the indicator is recorded for each object for a full calendar year, regardless of the month it was taken onto the balance sheet.

Its maximum value cannot exceed 100% of the cost. Achieving this value is not grounds for write-off if the funds are still serviceable. Depreciation of fixed assets is divided into 2 types:

avoidable - can be compensated for through economically feasible actions;
irreparable - restoration is impossible or economically infeasible.

By nature, physical and moral wear and tear of fixed assets are distinguished. Before starting calculations, the classification should be carried out correctly.

Physical deterioration

Deterioration of production and technical properties due to damage during operation and exposure to climatic factors. The result is a drop in profitability caused by decreased productivity as well as increased maintenance costs.

Its pace is affected by the following parameters:

the quality of the objects themselves, the correct care of them;
operating features;
protection of objects from weather conditions;
staff skills.

Determining the wear rate is possible using two assessment methods:

the relationship between actual and normative parameters;
results of technical condition inspection.

For elements characterized by productivity, this value is calculated by comparing the actual work performed and the duration of operation with the standard ones. The coefficient is equal to the ratio of the product of the number of years worked and the average annual volume of output to the product of the standard service life and output:

K = Tfatk*Qfact/Tnorm*Qnorm

The assumption of a uniform rate of deterioration is applied to the rest of the fixed assets. The coefficient is considered equal to the ratio of the number of years actually worked to the standard service life. The formula for calculating this indicator takes the form: Based on the frequency of occurrence of the need to update an object, the following groups are distinguished:

high strength, rarely requiring major repairs of individual parts;
requiring repair due to periodic failure of individual parts;
parts of which, with the exception of the main structures, are subject to repair or replacement systematically;
those in need of continuous updating by replacing individual parts;
non-repairable, requiring replacement at the end of the regulated service life.

Obsolescence

This term refers to the loss of economic feasibility of using production assets until 100% physical wear and tear is achieved. Its value is taken into account during the revaluation. The following types of obsolescence are distinguished:

caused by the influence of technical progress, for example, the introduction of new high-performance equipment;
caused by the depreciation of funds due to a decrease in the cost of reproduction of similar objects.

Obsolescence can be:

partial (operation in individual operations remains advisable);
full (use is unprofitable).

There are also social and environmental types of wear and tear caused by the adoption of new legislative standards or restrictions in the field of labor protection, the requirements of which the existing production resources do not meet.

According to the unified methodology for determining the amount of costs for restoration repairs in relation to a damaged vehicle within the framework of compulsory motor liability insurance approved by the Regulations of the Central Bank of the Russian Federation dated September 19, 2014.

Depreciation of a vehicle under compulsory motor liability insurance (parts, assemblies, assemblies) is calculated using the following formula:

Where:
And ki - wear of a component (part, assembly, unit) (percent);
e is the base of natural logarithms (e ≈ 2.72);
Δ T is a coefficient that takes into account the influence on the wear of a component (part, assembly, unit) and its service life;
Tki - service life of a component product (part, assembly, unit);
Δ L is a coefficient that takes into account the effect on the wear of a component (part, assembly, unit) of the vehicle mileage with this component;
Lki - vehicle mileage on the date of the traffic accident.

The values of the coefficients ∆ T and ∆ L for various categories and brands of vehicles are given in Appendix 5 to this Methodology.

Any production facility in which products are manufactured, services are provided, and any work is performed has an operating system. The results of this production largely depend on the quality, quantity, condition, and cost of the operating system. This indicates that a rigorous review of their use is needed. Also, one of the main places is occupied by the issue of increasing the efficiency of the OS.

What is OS wear and tear

Concept and essence

Having studied the role of all elements of the operating system, it is possible to find methods for increasing the effectiveness of their use, which will ensure lower production costs and increase the growth of labor productivity (labor productivity).

Depreciation of an OS is the process of an OS losing its market value. Compensation for OS wear occurs through depreciation. Depreciation refers to the process by which the price of an asset is gradually transferred to the products produced by the enterprise in order to accumulate a certain amount necessary for the further functioning of the asset.

Depreciation of fixed assets is described in the video below:

Kinds

There are 2 types of wear and tear: physical and moral.

Physical deterioration is a process in which OSs lose their market value as parts wear out, under the influence of natural factors and the external environment. Physical wear and tear can be either productive or unproductive. With productive wear and tear, value is lost as a result of use. Unproductive wear and tear occurs due to the natural processes of aging. Physical coefficient depreciation is equal to the ratio of the amount of depreciation accrued over the entire service life to the original price of the fixed asset.
Obsolescence is a process in which the cost of operating systems decreases as a result of a decrease in the cost of production of a similar product and due to the emergence of newer equipment. Moral wear and tear does not depend in any way on physical wear and tear. Equipment physically suitable for work may be so outdated that its operation will be economically unprofitable for the organization. The following types of obsolescence are distinguished:
- Depreciation of fixed assets due to the production of similar ones, but with less costs and a lower price;
- As a result of scientific and technical progress, the emergence of new, higher quality and more productive equipment. Obsolescence can be equal to the ratio of the difference between the initial and replacement costs of the means of labor to the original cost of these same means.

Also, depreciation can be equal to the ratio of the product of the replacement cost of new equipment and the productivity of obsolete equipment to the productivity of modern equipment/machine. The essence of obsolescence is that tools lose their value before their service life ends.

Please note that any wear and tear implies a loss of value. Therefore, any production association needs to have additional sources of funds in case of need to restore or replace operating systems that are subject to wear and tear.

How to determine it

Now, having decided what OS wear is and what types it comes in, you can move on to how to calculate it.

Coefficient and percentage of depreciation of fixed assets

The following options are available for calculating the percentage of OS wear.

Linear. This implies writing off the cost in equal parts (or depreciation) over the entire period of use of the OS. This method is always applied to buildings that belong to the following groups: objects that have been in use for 20-25 years, those that have been in use for 25-30 years, and those that have been in use for more than 30 years. For other objects, it is possible to use some other method. The advantages of the linear method include ease of calculation, accuracy in writing off the cost of objects and uniformity. The disadvantages of this method include the fact that it is not suitable for organizations that plan to update production assets quickly enough and for property to which the non-linear method will be applied, the total tax amount will be less.
Reducing balance. This is a non-linear method in which depreciation of fixed assets is accrued unevenly over the entire period of its use. To use this calculation, you must assign an acceleration factor and a salvage value write-off option. The advantages of this method include the fact that the performance of almost all operating systems is initially higher. And this method assumes precisely that the usefulness of using equipment decreases every year. The disadvantages include difficult calculations and the need for additional values for this calculation.
Write-off of cost based on the sum of the numbers of years of the useful life period. The total amount of depreciation for the year depends on the original cost, the sum of the numbers of years of the useful life period and the number of years remaining until its completion. The advantage is that this method works well in situations where the OS is used most intensively at the beginning. Another advantage is the simplicity of calculations. The method has no significant disadvantages.
Write-off of the original price of the object in proportion to the quantity of products. With this method, depreciation depends on the number of products that were produced during the reporting period, and also depends on the expected number of products over the entire duration of use. The advantage of this method is that it shows the wear and tear of the OS more than other methods. The downside is the difficulty in calculations, since you need to initially decide how to calculate depreciation, annually or monthly.

To analyze the state of the OS, the wear coefficient of the OS is used. It shows how much the OS has been depreciated. This ratio is the ratio of depreciation to the original cost of the asset. All operating systems are subject to moral and physical wear and tear during their operation. To determine the level of wear, this coefficient is calculated.

A lot of useful information on calculating wear and tear on operating systems is given in this video:

Cost calculation

The cost of wear and tear can be calculated as follows:

With method 1: A = * depreciation rate.
At 2: A = * coefficient. acceleration * depreciation rate.
With method 3: A = initial cost of the asset * number of years remaining until the end of the effective use period / sum of the numbers of years of the effective use period
With method 4: A = ratio of the product actual volume of production * initial cost / / approximate volume of production for the entire period of use.

Accounting for depreciation and features of its calculation

With regards to accounting for fixed assets, the material resources that cover the costs of purchasing and replacing fixed assets can only be made from the enterprise’s revenue for products sold. The mechanism by which the cost of an asset is transferred to the finished product over time and a reserve of savings is created to replace the asset is called depreciation.