In the financial calculations of any normally operating enterprise, depreciation deductions are necessarily present. There is a constant wear of equipment, buildings, automotive equipment, etc. How to compensate for the costs that will inevitably arise with the restoration of fixed assets, where can I get money to carry out planned and other types of repairs? Here, we are helped by depreciation charges specially calculated for such cases.
This type of deductions is very important for the work of the enterprise and is included in the cost price of the products. As a result, the enterprise receives a certain amount, which can be spent on capital repairs or other types of repairs. All equipment repairs are aimed at restoring or upgrading the main fund or some part thereof. The depreciation of fixed assets expressed in money terms is called "depreciation charges". The basic means put into the design of the enterprise for fixed assets should be enough to purchase all necessary equipment and construction of buildings and communications.
The practice of carrying out depreciation charges is widespread throughout the world. They are produced according to the norms specially developed for this purpose, which take into account the cost of the main fund and its monthly wear.
The established rates of depreciation allow not only to take into account the value of fixed assets retiring from operation, but also to correctly calculate the cost of production. The latter parameter is very important for any enterprise, it participates in many calculations.
Correctly calculated depreciation deductions will ensure the restoration of fixed assets. They will also affect the profitability of the products. Depreciation deductions continue to be expensed during the period of equipment conservation or when it is stopped due to lack of orders or for any other reason. Depreciation charges cease in the period of reconstruction of fixed assets, with complete suspension of equipment.
The amortization policy of any enterprise is very important for its normal work in the market of manufactured products. It affects the depreciation deductions carried out by the enterprise and affects the organization of equipment repairs. Moreover, it directly affects the competitiveness of products and the profitability of the entire enterprise. The depreciation policy aimed at lowering depreciation charges can lead to a complete shutdown of the enterprise. This will be due to a lack of funds for the repair of equipment. At the same time, their overstating is dangerous, since in this case the cost of manufactured products will increase and, as a consequence, its competitiveness in the market will change. This can lead to loss of profit by reducing the number of products sold, which will also negatively affect the work of the entire enterprise.
In financial documents of any enterprise there are annual depreciation charges that are calculated taking into account the maximum number of products that this equipment produced during the reporting period and the cost of the equipment itself. This indicator helps to adjust the monthly depreciation charges.