In accounting, the carrying value of fixed assets is used for accounting of presence and movement of their value in the balance sheet. The carrying cost of fixed assets that have just arrived at the company, calculated on the basis of their method of application. For example, it can be equal to the amount of payment for the purchase of the property and the cost of commissioning. In the preparation of the balance sheet the following accounting periods, the carrying value is reduced by the amount of losses from depreciation and accumulated depreciation. If you have used borrowed funds for purchase, also takes into account the payment of credit interest rate in the reporting period. Legislative acts define the basic calculation rules of the original book value depending on the method of acquisition of fixed assets: barter, construction, or fabrication, donation, share of contribution to the Charter capital, transfer in trust management. These rules are clear enough not to cause difficulties in application. The carrying value of fixed assets may change during operation is influenced by a number of factors, that sometimes can only highly qualified specialists. These factors include: depreciation; change in value through changes in market prices; costs of maintenance, repair and reconstruction.Consideration of these factors is due to the annual revaluation of fixed assets, which affect not only actual costs but also the operating conditions: the number of working shifts, the impact of aggressiveness of the environment, inflationary pressures, fatigue of materials, duration of usage and so on. These conditions result in a change in carrying amount of fixed assets that cannot be measured by standard rules, so for the revaluation are involved highly skilled experts.
What is the carrying value of the asset
The most important document for the analysis of efficiency of activity of the company is balance. It allows you to understand the condition of the assets and liabilities of the enterprise. The assets comprise fixed and current assets. And if the working capital is not difficult, the main tools used in the enterprise repeatedly and for a long time, which complicates the process of determining the cost. To simplify this procedure by using the carrying cost of fixed assets.
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