Instruction

1

Remember that when determining the value of the asset there are several types of it. The initial

**value**reflects the actual acquisition costs of the property. It is not changed during the whole period of the asset, except in cases of completion, reconstruction or partial liquidation.2

To determine the residual

**value**you can as the difference between the original**cost**and the amount of wear: OST = first – I. the Valuation of fixed assets at the residual value needed in order to know their condition during use, and also for preparation of the balance sheet.3

Instead of the original value in the formula you can use the recovery

**cost**. It corresponds to the cost of creation or purchase of similar fixed assets in modern conditions. To determine the replacement cost of fixed assets should be revalued by indexation and by the method of direct recalculation at actual market prices.4

In the analysis of fixed assets at the residual value you should calculate the residual

**value**at the end of the year. It is defined as follows:Ed(K) = Comp(n) + Swed – Swib, where Comp(K) is the residual**value**of the property at the end of the year, With OST(n) – the residual**value**of assets at beginning of year Swed –**cost**introduced during the year fixed assets Svib –**cost**eliminated during the year fixed assets.5

Since the value of the residual value of fixed assets at the beginning and end of the year can vary considerably, for analysis you can use the average residual

**value**. It is calculated as follows:Comp(SR) = (Comp(sum) + Comp(trail))/(N+1), where Comp(CP) – the average residual**value**of fixed assets] (amount) – the sum of residual value of fixed assets on the 1st day of each month in the period, Comp(next) – the amount of residual value on the 1st day of the month following the reporting period, N is the number of months in the reporting period.# Advice 2 : How to find the cost of fixed assets

Any modern company that wants to maintain and strengthen a stable position on the market, is obliged to carry out monitoring and evaluation of all its fixed assets and

**funds**. This measure will allow to shape the current budget and plan funds given the current state of**funds**.Instruction

1

To calculate the value of fixed

**funds**you first make a list of them. Fixed assets include land, industrial buildings and constructions, equipment, machines, tools, instruments, in General, the entire production of the physical capital of the enterprise.2

Then calculate the total initial

**cost**, which is in the form of money expresses the actual expenses for purchase, delivery, assembling and installation of equipment construction of buildings.Calculate unamortized**cost**, i.e. original**cost**less depreciation. Value of fixed**funds**is calculated according to the formula: total initial**cost**of the basic**funds**minus the amount of depreciation for a specific date.3

Calculate the full replacement

**cost**, i.e. the monetary value of the reproduction of any object of major**funds**. This figure determines the amount of costs required in case of replacement of fixed assets. The calculation uses the index of the new market prices, the cost of similar objects for which the recovery**value**is already defined, larger coefficients of price changes.4

Calculate residual

**value**, which is inventory or replacement**cost**Yu less of any of these elements: depreciation, calculated with depreciation deductions and the coefficients of the amendments thereto, and the wear calculated using the method of expert estimates. It is important that the estimated**cost**of any defects that have arisen during continuous and prolonged operation of facilities, which led to lower consumer qualities.5

Determine the market or estimated

Determine the carrying

**value**, that is, the price at which a buyer is willing to purchase the fixed assets on the basis of the contract of sale for the auction come from other similar trades, for example, tenders. On market**value**profitability is affected by inflation and other market factors.Determine the carrying

**value**of major**funds**. It is very easy to find and is reflected in the balance sheets of the company.6

Determine liquidation

**value**of basic**funds**. It is usually installed by the liquidation Commission of the organization that is subject to liquidation due to bankruptcy. However, the law provides some other basis for determining the liquidation value of fixed**funds**.# Advice 3 : How to calculate residual value

The residual value of fixed assets (hereinafter OS) mean value of the asset, calculated based on their wear and equal to the original value minus depreciation for the entire period of operation. The calculation of residual value are involved, as a rule, accountants and auditors.

Instruction

1

To calculate the residual value of the used linear or non-linear depreciation method. The residual value of the asset, according to the decree of the Ministry of Finance, define as the difference between their initial value and depreciation amount that is accrued during the period of operation.

2

To determine the residual value of the property, first you need to determine the residual value for each month of the reporting period. Next, summarize all the obtained values of the residual value and the sum is divide by the number of months in the reporting period increased by 1. That is, in the report for the quarter is divided into four, six months, seven, nine or ten months.

3

To calculate the average cost should be for each group of objects. Then the average cost, which was released for each individual item, multiply by the tax rate. It is defined for each object, the laws of subjects of the Russian Federation. However, each of them must not exceed 2.2% (article 380 of the tax code).

4

Amount received average property value and the tax rate divide by 4. The result is a quarter of the annual amount of tax. This is a down payment. The rounded amount of advance payment is reflected in the line 180 of section 2 of the tax calculation.

5

There is also a reversal – residual value of the object, which is obtained upon termination of the income stream. It can be defined at the end of the operation of the facility and its resale at an earlier stage. Reversion at the end of the lifetime of the object is determined on the basis of the hypothesis that the land value will remain unchanged and the income derived from it, also does not change. Normal straight-line compensation of capital used is based on the assumption that the income stream from the building is considered to be decreasing in time.

Note

The value of the asset in the accounting records may not correspond to their real value. Therefore, in order to bring the residual value of the object in accordance with the market price, they will be re-evaluated.

# Advice 4 : How to determine replacement cost

Depreciation of equipment, buildings entails a recalculation of the original cost. Fixed assets purchased at different times, have different impacts on the balance sheet. In the process of using fixed assets are subject to revaluation with the aim of identifying their replacement cost.

Instruction

1

Make a list of assets requiring revaluation on your enterprise. Fixed assets include: buildings, structures, production equipment, machines and all the tools that make up the physical capital of the enterprise.

2

Use one of two methods of revaluation of fixed assets. Determine the replacement cost by indexing the original cost taking into account depreciation. To do this, find out the original value of fixed assets. It consists of the price paid at purchase and transport and other costs required for the commissioning of fixed assets. All the costs incurred while installing, the production of fixed assets are taken into account at definition of initial cost. However, the value added tax is not included in this figure. Also in the initial cost do not include General and similar costs if they are not directly related to the acquisition of fixed assets.

3

When the initial counted value, and the revaluation index is known, calculate the replacement value according to the formula given below:

FV = FP * Nper, where

FV – replacement value, expressed in rubles

Op – the initial cost is expressed in rubles, and

Nper – the revaluation coefficient.

FV = FP * Nper, where

FV – replacement value, expressed in rubles

Op – the initial cost is expressed in rubles, and

Nper – the revaluation coefficient.

Note

The replacement cost after revaluation of fixed assets is called an initial value.

Useful advice

The calculation of replacement cost is not required for organizations. This procedure can be repeated at the enterprise not more often than 1 time per year, where the beginning of the year taken 1 Jan. Each company in its accounting policy has the right to make their own list of assets that need in terms of replacement cost for a certain period of time.