Reproduction of fixed assets
| Autor | Nadezhda A. Sereda |
| Cargo | Federal State Budgetary Educational Institution of Higher Education Kostroma State Agricultural Academy |
| Páginas | 648-666 |
Periódico do Núcleo de Estudos e Pesquisas sobre Gênero e Direito
Centro de Ciências Jurídicas - Universidade Federal da Paraíba
V. 9 - Nº 04 - Ano 2020
ISSN | 2179-7137 | http://periodicos.ufpb.br/ojs2/index.php/ged/index
648
REPRODUCTION OF FIXED ASSETS
Nadezhda A. Sereda
1
Abstract: The relevance of research is
conditioned by objective need for management
of reproduction processes. Fixed assets
turnover takes place through depreciation
charges in which respect the depreciation
policy is one of the methods of managing its
reproduction. Theoretically depreciation is a
source of simple reproduction, whereas in
practice it can be a source of extended
reproduction due to time shifting of
depreciation reserve generation and
replacement of fixed assets. In fact however it
does not resolve even the objectives of simple
reproduction due to inappropriate use. The
research is directed at revealing new tools of
depreciation policy, and grounding the
distribution of functions of state and economic
entities in management of fixed-assets
reproduction. The paper specifies the role of
depreciation policy as a tool for reproduction
management, identifies the peculiar features of
economic and accounting approach to
understanding of depreciation essence and
their discrepancy in settling reproduction
objectives. It was established that despite the
theoretical existence of the uniform,
progressive and digressive methods of
1
Federal State Budgetary Educational Institution of Higher Education Kostroma State
Agricultural Academy.
depreciation, presently there is not a single
depreciation method in Russia referring to the
progressive ones. It was suggested to introduce
into practice the inflation indexation of
depreciation, which refers to progressive
methods – the depreciation norm grows in time
interval of charging thereof. Project proposals
were simulated and correlated with the actual
data on the example of agricultural
organizations of Kostroma oblast in Russia. It
was established that depreciation indexation by
8% per year will indirectly raise the amount of
state subsidies by 1.7% without direct
payments through reduction of taxable base
and amounts of taxes withdrawn. The method
of indexed depreciation is attractive for
economic entities. In this respect the state can
use an additional tool of economic regulation:
to oblige the enterprises selecting this method
to use the depreciation reserve as per
designation. Introducing the proposed
depreciation method into practice allows
resolving a number of objectives
simultaneously: secure protection of
depreciation reserve from inflation, fulfill the
functions of simple and extended reproduction
through depreciation. Indexed depreciation
Periódico do Núcleo de Estudos e Pesquisas sobre Gênero e Direito
Centro de Ciências Jurídicas - Universidade Federal da Paraíba
V. 9 - Nº 04 - Ano 2020
ISSN | 2179-7137 | http://periodicos.ufpb.br/ojs2/index.php/ged/index
649
being one of the forms of state support can be
introduced selectively, for instance for
agricultural manufacturers only. The presented
method is a tool of state support that does not
refer to the measures influencing directly the
production enhancement and trade restriction,
and does not have hindrances for usage as per
the rules of the World Trade Organization.
Keywords: reproduction, fixed assets,
depreciation policy, state support
1. Introduction
Fixed assets turnover takes place
through charging of depreciation. In the
process of use fixed assets transmit their value
by installments to the created product in form
of depreciation charges. Depreciation charges
are included in the expenses of production
(cost of products), then pass into price and
return in form of revenue. Enterprises are
obliged to accumulate depreciation charges by
saving them from revenue to depreciation
reserve, which in its turn shall be used to
reproduce fixed assets.
Depreciation reserve has a dual
economic function ensuring the process of
both simple and extended reproduction. The
possibility of extended reproduction is
conditioned by the fact that charging of
depreciation has a constant and continuous
nature and depreciation is spent to refund the
wear of fixed assets discretely at the end of
their useful life. Using depreciation reserve for
increment of fixed assets is possible due to
time shifting of the process of transmitting
value to the product and using the funds to
replace items of property in kind.
The procedure of generating
depreciation reserve is determined by the
depreciation policy. Depreciation policy can
be considered at two levels: state and
economic. At the economic level (level of
enterprise) the objective consists in selecting
the most acceptable and efficient methods
from the available ones for specific economic
conditions. Depreciation strategy shall reflect
the relevant stage of production development,
scientific and technical progress, qualitative
and quantitative composition of fixed assets, as
well as financial capacity of the enterprise. In
modern conditions, the depreciation policy is
an effective tool of financial management [1].
Depreciation policy shall be formed
basing on the analysis of efficiency of its
options in accordance with the strategy of the
enterprise, available forecasts of the technical
and economic development of certain fields
and state economy on the whole [2].
State functions include the
development of depreciation groups of fixed
assets, methods of depreciation charging, and
requirements to fixed assets accounting and
taxation. At both levels, the main criterion of
efficient depreciation policy shall be the fullest
correlation of the depreciation formation
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