Reproduction of fixed assets of the enterprise

What does the process of reproduction of fixed assets mean? What does it mean in the modern world? How is the reproduction of fixed assets carried out ? These, as well as a number of other issues will be considered in the framework of this article.

general information

Under market conditions, the policy of reproduction of fixed assets is extremely important. After all, it determines the qualitative and quantitative state of the means of production. At the macro level, the main task is to create favorable conditions for all business entities so that they can engage in simple and extended reproduction, acquire new equipment, reconstruct and technically re-equip funds. This task is carried out through amortization, taxation and investment policies.

What is the reproduction of fixed assets?

This is a continuous process of renewal, which uses the opportunities for acquiring new, reconstruction, modernization, overhaul and technical re-equipment. The main task is to provide the company with the basic funds in the right quantitative and qualitative composition and keep them in working order. This process solves the following tasks:

1. Reimburses retired for various reasons, labor. This is done to prevent the reduction of production capacity.
2. The mass of the means of labor is increasing. This is how the prerequisites for the growth of the scope of the enterprise's activities and production of products are created.
3. The clothing, age and technological components of fixed assets are improving. Their improvement is carried out in order to ensure further growth in the efficiency of production and increase its effectiveness.

The quantitative component of reproduction is reflected in their balance, which is compiled by industry.

Using formulas

Reproduction of basic production assets and their numerical characteristics are well represented in the numerical version: Fc = Fn - Fl + Fv. What does this formula mean? It is deciphered as follows:

• FK - the value of fixed assets, which were liquidated throughout the year;
• Fn - how much was in the beginning;
• Fl - the cost of disabled fixed assets;
• FV - the monetary expression introduced during the year.

This is only the most general formula. For a more detailed study of the real state of affairs, various coefficients, such as renewal and liquidation of fixed assets, and also enterprise performance indicators can be used. Let's look at a couple of examples. First, let's pay attention to the update coefficient. It is expressed by the following formula: Ko = Фв / Фк. The last two components we have already considered, and Ko is the refresh rate. It shows the share of fixed assets introduced in the given time interval in the value of their total monetary value at the end of the period under review. In addition to Ko, we also consider the dropout ratio. His formula is: Bq = Fl / Fn. Both considered coefficients can be expressed as a percentage. If Ko is larger than Q, then this indicates that the process of improving the fixed assets and expanding the scope of the enterprise is under way.

Terminology

Reproduction of fixed assets of the enterprise is an interesting topic for entrepreneurs, as well as those who wish to take this path. But for a qualitative analysis of the topic it is necessary to understand the essence of the two terms: the stock-equipping and the capital-equipping. What do they mean? Under the first one understand the average annual cost of the fixed assets created, that is at the enterprise in relation to the whole subject or its component (for example, the shop). If we talk about the agricultural production complex, then we can take a figure of one hundred, for example, a hectare.

By fondovooruzhennostyu mean the average cost of fixed assets that operate in the enterprise with the calculation of one employee. Knowing the dynamics of these two indicators, we can make a conclusion about the reproductive policy that is being conducted in the company. It should be noted that it should be implemented at micro and macro levels. Thanks to this you can get the best quantitative and qualitative effect.

How does this process happen?

Conditionally, we can distinguish four forms of reproduction of fixed assets:

1. Creature.
2. Using.
3. Depreciation.
4. Recovery.

Creation most often occurs outside the enterprise. An exception is unless the construction industry and engineering (especially this applies to instrumentation). At this stage, fixed assets are acquired and formed. If we consider a new enterprise that is only being created, the process involves the construction of buildings and buildings, equipment is purchased and the like. The use implies the application for the purpose of obtaining the product. Amortization is maintenance in working order, and the restoration process refers to those fixed assets that can no longer fulfill their basic purpose.

And what about the existing enterprises?

They work in a different way. In general terms, it looks like this:

1. Inventory of all used and existing funds is carried out. This is aimed at identifying worn out and obsolete elements.
2. It is analyzed how much the existing equipment corresponds to the advanced achievements in the technological plan, and also the organization of production.
3. The structure and volume of fixed assets are being selected. At the same time, the specific specifics of production and the planned volume of product creation must be taken into account.
4. After that, there is a process of reinstallation of working fixed assets, their acquisition, delivery and installation.

Simple reproduction

In this case, only the replacement of the means of labor that have already become obsolete, or their repair, is carried out. This approach is rational at times when there is a decline in production and enterprises are massively stop operating. In these cases, reconstruction and technical re-equipment are more preferable. Can be implemented as follows:

1. Under the new project, existing buildings, workshops and so on are being expanded and reconstructed.
2. Part of the capital investment in this case is directed at updating the active component of fixed assets (which are machines and equipment), but at the same time they will use the old production buildings.

The variant with technical re-equipment allows to receive a larger increase in production in quantitative terms with less material expenses and in relatively short terms. This increases the productivity and efficiency of labor and reduces the cost of production. In addition, it is quite easy to find sources of reproduction of fixed assets for this option, since you need to spend relatively little money.

Extended reproduction

This is a more desirable type for any entrepreneur. Expanded reproduction of fixed assets is the expansion of existing companies, new construction, modernization of equipment and the like. In such cases, enterprises begin to operate, which, as a rule, meet all the requirements of progress. That is, the aim is to partially or completely eliminate the second form of obsolescence. In this case, the equipment indicators are increased.

If we talk about equipment, then conditionally here you can identify several areas. Initially, it is necessary to note the improvement of existing machines, as a result of which their performance characteristics are increased and technical capabilities are improved. Also mechanization and automation of machine tools takes place, which allows increasing the productivity of equipment. Also, in order to minimize the need to attract a person, the conversion of equipment to the possibility of program management is widely used. When can we say that equipment modernization is cost-effective? If after its carrying out the annual volume of production has grown, the cost of production has decreased and labor productivity has increased, it means that it was carried out not in vain. At the same time, the profitability of production also increases.