When establishing the amount of damage caused to a government institution, one should proceed from the current replacement cost of assets. How is this cost determined?

Mandatory general requirements for recording calculations for the amounts of identified shortages, thefts of funds, other valuables, for the amounts of losses from damage to material assets, and other amounts of damage caused to the property of the institution, subject to compensation by the perpetrators in the amount of damage, are determined Instruction No. 157n .

According to Art. 220 Instructions No. 157n the amount of damage caused by shortages and theft is established based on the current replacement cost of material assets on the day the damage was discovered, which is understood as the amount of money necessary to restore these assets.

The procedure for determining the current replacement cost is not established by Instruction No. 157n. When developing such a procedure, the Ministry of Finance recommends using methods similar to methods for determining the current assessed value ( Letter of the Ministry of Finance of the Russian Federation dated December 23, 2016 No. 02‑07‑10/77576).
Recall that the current estimated value is the amount of cash that can be received as a result of the sale of assets on the date of acceptance for accounting. The procedure for determining it for the purpose of capitalizing objects of non-financial assets onto the balance sheet of an institution has been established clause 25 of Instruction No. 157n.

In particular, the determination of the current assessed value is made on the basis of the price (confirmed by documents or by experts) valid on the date of acceptance for accounting (recording) of property for this or a similar type of property. When establishing such a value, the commission for the receipt and disposal of assets, created in the institution on an ongoing basis, uses:

– information on prices for similar material assets received in writing from manufacturing organizations;
– information on the price level available from state statistical bodies, as well as in the media and specialized literature;
– expert opinions (including experts recruited on a voluntary basis to work in the commission for the receipt and disposal of assets) on the value of individual (similar) objects of non-financial assets.

The procedure for determining the current replacement cost must be fixed in the local regulatory act of the institution (for example, in the accounting policy). How to reflect in budget accounting operations to compensate for damage caused to the property of a government institution (shortage of non-financial assets) in the amount of the current replacement cost of assets?

The procedure for recording transactions for settlements of amounts of damage caused to the property of a government institution subject to compensation by the perpetrators is regulated Instruction No. 162n .
In terms of the identified shortage of non-financial assets, the following operations are reflected in budget accounting:

Contents of operation		Debit		Credit	Provisions of Instruction No. 162n
Property shortages identified
The amounts of identified shortages of non-financial assets attributed to the guilty parties are reflected		1 209 xx 560		1 401 10 172	Paragraph 86
Deficiencies are compensated by the guilty parties
Compensation for shortages in cash is reflected:					Points 86, 104 , 109
– to the institution’s cash desk	1 201 34 510		1 209 xx 660
– to budget revenue (the institution is vested with the authority to administer cash receipts to the budget)	1 210 02 xxx
– to budget revenue (the institution is a recipient of budget funds, it is not assigned the authority to administer cash receipts to the budget)	1 303 05 830 1 304 04 xxx		1 209 xx 660 1 303 05 730
Compensation for shortages in kind is reflected	1 401 10 172		1 209 xx 660
The amounts of identified shortfalls are written off
Non-financial assets were written off as a result of shortages:					Points 10, 13 , 26 , 27 , 29
a) fixed assets	1 104 xx 410 1 401 10 172		1 101 xx 410
b) intangible assets	1 104 39 420 1 401 10 172		1 102 30 420
c) material reserves (including those in excess of natural loss norms)	1 401 10 172		1 105 xx 440
d) finished products	1 401 10 172		1 105 37 440
e) trade margin on goods written off as a result of shortages (using the “red reversal” method)	1 401 10 130		1 105 39 340

The amount of damages recovered is subject to transfer to the revenue of the corresponding budget ( clause 3 art. 41 BC RF).

A shortage of a multifunctional device (MFP) has been identified in a government institution. Its initial cost was 18,000 rubles, accrued depreciation was 100%. The replacement cost of the MFP was determined by the institution’s commission in the amount of 20,000 rubles. The employee responsible for causing the damage voluntarily compensated for the shortfall by transferring funds to the budget. The institution is not assigned the authority to administer cash receipts to the budget.

In budget accounting, these transactions should be reflected in the following entries:

Contents of operation	Debit	Credit	Amount, rub.
The cost of the MFP was written off as a result of a shortage	1 104 34 410	1 101 34 410	18 000
The shortage of multifunctional devices was attributed to the account of the guilty person (at replacement cost)	1 209 71 560	1 401 10 172	20 000
The shortage of MFPs has been compensated:
– reflects the transfer of funds by the guilty party for damages to the budget revenue	1 303 05 830	1 209 71 660	20 000
– reflects the settlements between the state institution and the budget revenue administrator, who exercises certain powers to administer cash receipts to the budget, issued by notices (f. 0504805)	1 304 04 410	1 303 05 730	20 000

A shortage of special clothing in the amount of 4,000 rubles was discovered in a government institution. The replacement cost of workwear was determined by the institution’s commission; it is equal to the book value (4,000 rubles). The amount of the shortfall was compensated by the guilty party in kind.

In the accounting of a government institution, these transactions will be reflected in the following correspondence accounts: Instructions for the application of the Unified Chart of Accounts for public authorities (state bodies), local governments, management bodies of state extra-budgetary funds, state academies of sciences, state (municipal) institutions, approved. By Order of the Ministry of Finance of the Russian Federation dated December 1, 2010 No. 157n.

Fixed assets are reflected at their initial, replacement, current, residual, and liquidation values. The rules for forming the value of fixed assets in accounting and taxation often differ.

Initial cost of fixed assets is formed at the time of their acquisition by the organization. It is defined for objects:

• manufactured in the organization itself, as well as purchased for a fee from other organizations and individuals - at the actual costs of acquisition, construction and production of fixed assets, excluding VAT and other refundable taxes (except for cases provided for by law);
• contributed by the founders as a contribution to the charter captain - at an agreed price;
• received by the organization free of charge - at the current market price on the date of acceptance for accounting as investments in non-current assets;
• acquired in exchange for other property other than cash - based on the price at which, in comparable circumstances, the organization usually determines the cost of similar goods;
• acquired in foreign currency - is made in rubles by recalculating the amount in foreign currency at the rate of the Central Bank of the Russian Federation effective on the date of acceptance of the object for accounting as investments in non-current assets;
• accepted fixed assets recognized as surplus based on inventory results - at current market value;
• parts, components and assemblies of the disposed object, suitable for the repair of other fixed assets, as well as other materials - at the current market value as of the date of acceptance for accounting;
• the organization's capital investments in perennial plantings for radical land improvement (drainage, irrigation and other reclamation works) are included in fixed assets at the end of the reporting year in the amount of costs, regardless of the completion date of the work package;
• an object owned by two or more organizations is reflected by each organization as part of fixed assets in proportion to its share in the common property;
• costs for completion, additional equipment, reconstruction, modernization of a fixed asset item either increase the initial cost or are accounted for separately in the fixed asset account.

Replacement cost of fixed assets- this is the cost of their reproduction for a certain period, which is determined by revaluation. According to PBU 6/01, organizations are given the right to carry out revaluation at the end of the reporting year using indexation or direct recalculation based on documented market prices.

Current (replacement) cost fixed assets - the amount of money that must be paid by the organization on the date of revaluation if it is necessary to replace any object.

Current market value- this is the amount of money that can be received as a result of the sale of the specified asset on the date of acceptance for accounting.

Residual value - original or replacement cost less accumulated depreciation.

Liquidation value - this is the cost of selling objects in the event of bankruptcy or liquidation of an organization on the basis of a free auction and open sale of objects at the current market value.

IFRS 16 defines salvage value as the amount that can be received for an asset that has reached its useful life, less costs to sell.

This international standard defines the fair value of fixed assets, which is used when exchanging assets. fair value- the value of an asset in a transaction between knowledgeable parties who are willing to make such a transaction and independent of each other.

Revaluation of fixed assets is carried out in order to determine the current (replacement) cost of fixed assets by bringing the original cost of fixed assets in accordance with their market prices and reproduction conditions on the date of revaluation.

The cost of fixed assets in which they are accepted for accounting is not subject to change, except in cases established by the legislation of the Russian Federation and the Accounting Regulations) "Accounting for fixed assets" PBU 6/01. Change in the initial cost of fixed assets in which they accepted for accounting, is allowed in cases of completion, additional equipment, reconstruction, modernization, partial liquidation and revaluation of fixed assets.

Costs for completion, additional equipment, reconstruction, modernization of fixed assets are taken into account in account 08 “Investments in non-current assets”. After the completion of the above-mentioned methods of restoration of fixed assets, the associated costs increase the initial cost of the objects if, as a result of restoration, the initially accepted standard performance indicators (for example, useful life, power, quality of use) of the fixed asset object are improved (increased).

In accordance with the Accounting Regulations “Accounting for Fixed Assets” PBU 6/01, a commercial organization may revalue groups of similar fixed assets at current (replacement) cost no more than once a year (at the end of the reporting year). When determining the current (replacement) cost, data on similar products obtained from manufacturing organizations is used; information on price levels available from state statistics bodies, trade inspectorates and organizations; information on price levels published in the media and specialized literature; technical inventory bureau assessment; expert opinions on the current (replacement) cost of fixed assets.

Land plots and environmental management facilities (water, subsoil and other natural resources) are not subject to revaluation.

When deciding on the revaluation of fixed assets included in a homogeneous group of objects (buildings, structures, vehicles, etc.), the organization should take into account that subsequently the fixed assets of a homogeneous group must be revalued regularly so that the value of these fixed assets , according to which they are reflected in accounting and financial statements, did not differ significantly from the current (replacement) cost.

The revaluation of fixed assets must be preceded by preparatory work, in particular the preparation of a list of objects subject to revaluation and checking their availability. It is recommended to provide the following information about fixed assets in the list: name and inventory number; date of acquisition, construction, manufacture; date of acceptance of the object for accounting as an investment in non-current assets and commissioning. The organization's decision to conduct a revaluation at the end of the reporting year is formalized in the appropriate administrative document, mandatory for all services of the organization that will be involved in the revaluation of fixed assets.

The initial data for the revaluation of fixed assets are: the initial cost or the current (replacement) cost (if this object was revalued earlier), at which they are taken into account in accounting as of December 31 of the previous reporting year: the amount of depreciation accrued for the entire period of use of the object according to as of the specified date: documented data on the current (replacement) cost of revalued fixed assets as of January 1 of the reporting year.

Revaluation of an object of fixed assets is carried out by recalculating its original cost or current (replacement) cost, if this object was revalued earlier, and the amount of depreciation accrued for the entire period of use of the object. The results of the revaluation of fixed assets carried out at the end of the reporting year are subject to reflection in accounting separately.

In accounting, the results of the revaluation of fixed assets are reflected in accounts 01 “Fixed assets”. 02 “Depreciation of fixed assets”, 83 “Additional captain” and. The correspondence of accounting accounts is different in different situations (Table 1).

Table 1. Entries in the accounting accounts for the revaluation of fixed assets (FPE)

Business transaction	Account debit Account credit
1. Fixed assets have not previously been revalued
1.1. Additional assessment of the cost of the OS object: by the amount of increase in the initial cost of the fixed asset; by the amount of increase in accrued depreciation on an asset	01 "Fixed assets" 83 “Additional capital”	83 “Additional capital” 02 “Depreciation of fixed assets”
1.2. Depreciation of fixed assets: by the amount of reduction in the original cost OS object: by the amount of reduction in accrued depreciation of an asset	84 02 “Depreciation of fixed assets”	01 "Fixed assets" 84 “Retained earnings (uncovered loss)”
2. Fixed assets were previously revalued
2.1. Revaluation after a previously made depreciation of the value of fixed assets: by the amount of a previously made reduction in the initial cost of an asset (within the amount of the markdown); by the amount of the previously made reduction in accrued depreciation on the fixed asset: by the amount of increase in the current (replacement) cost of an asset (over the amount of the markdown); by the amount of the increase in accrued depreciation on the fixed asset (above the amount of markdown)	01 "Fixed assets" 84 “Retained earnings (uncovered loss)” 01 "Fixed assets" 83 “Additional capital”	84 “Retained earnings (uncovered loss)” 02 “Depreciation of fixed assets” 83 “Additional capital” 02 “Depreciation of fixed assets”
2.2. Markdown after a previously made revaluation of the value of fixed assets: by the amount of a previously made increase in the initial cost of an asset; by the amount of a previously made increase in accrued depreciation on an asset; by the amount of reduction in the current (replacement) cost of the fixed asset (above the amount of the revaluation); by the amount of reduction in accrued depreciation on a fixed asset (above the amount of revaluation)	"Extra capital" 02 “Depreciation of fixed assets” 01 "Fixed assets" “Retained earnings (uncovered loss)”	"Fixed assets" "Extra capital" “Retained earnings (uncovered loss)” "Amortization of fixed assets"

1. The fixed asset item has not been revalued before (the initial cost of the item and the amount of accrued depreciation are recalculated):

• additional assessment is carried out;
• markdown is carried out.

2. The fixed asset item was previously revalued (the current (replacement) cost of the item and the amount of accrued depreciation are recalculated):

• revaluation is carried out after a previously made depreciation of the value of fixed assets;
• a markdown is carried out after a previously revalued value of fixed assets.

When an item of fixed assets is disposed of, the amount of its revaluation is written off (transferred from additional capital to retained earnings):

• Dt 83 “Additional captain”
• Kit 84 “Retained earnings (uncovered loss).”

Valuation of fixed assets

There are three types of valuation of fixed assets:

• initial cost;
• replacement cost;
• residual value.

In accordance with the current procedure, fixed assets are reflected in accounting according to original or restorative cost.

Initial cost of fixed assets

The initial cost is determined differently depending on the sources (channels) of receipt of fixed assets.

Table 2. Valuation of fixed assets

Source of receipt of fixed assets	Initial cost
Acquisition for a fee, creation (construction)	Actual expenses incurred for acquisition, construction and production: Amounts paid in accordance with the contract to the supplier Delivery, installation, installation costs Cost of information and consulting services related to the acquisition of fixed assets
	Registration fees, state duties and other similar payments made in connection with the acquisition of rights to an object of fixed assets Customs duties and other payments Non-refundable taxes paid in connection with the acquisition of an item of property, plant and equipment Fees paid to the intermediary organization through which the fixed asset was acquired Other costs directly related to the acquisition, construction and production of fixed assets
Purchase under an exchange agreement	The cost of goods (valuables) transferred or to be transferred by the enterprise. The cost of goods (valuables) transferred or to be transferred is established based on the price, but which, in comparable circumstances, the enterprise usually determines the cost of similar goods (valuables)
Capital contribution	Monetary valuation agreed with the founders, unless otherwise provided by the legislation of the Russian Federation
Donation (free of charge)	Market value on the date of acceptance of the object for accounting
Purchase of used fixed assets for a fee	The amount of actual purchase costs and expenses for delivery, installation, etc.

The cost of fixed assets in which they are accepted for accounting is not subject to change, except in cases established by the legislation of the Russian Federation and G1BU 6/01. A change in the initial cost of fixed assets is allowed in the following cases:

• completions;
• additional equipment;
• reconstruction;
• partial liquidation;
• revaluation.

Replacement cost of fixed assets

Replacement cost— these are the costs of an enterprise for the reproduction of fixed assets in specific economic conditions (in modern conditions).

Fixed assets are valued at replacement cost as a result of their revaluation.

A commercial organization may not more than once a year (at the beginning of the reporting year) revalue groups of similar fixed assets at current (replacement) cost.

When making a decision on revaluation of such fixed assets, it should be taken into account that subsequently they are revalued regularly so that the cost of fixed assets at which they are reflected in accounting and reporting does not differ significantly from the current (replacement) cost.

Revaluation of an object of fixed assets is carried out by recalculating its original cost or current (replacement) cost, if this object was revalued earlier, and the amount of depreciation accrued for the entire period of use of the object.

The results of the revaluation of fixed assets carried out as of the first day of the reporting year are subject to reflection in accounting separately. The results of the revaluation are not included in the financial statements of the previous reporting year and are accepted when generating the balance sheet data at the beginning of the next reporting year.

The amount of revaluation of an object of fixed assets as a result of revaluation is credited to the additional capital of the organization.

• Debit 01 “Fixed Assets”
• Credit 83 “Additional capital” - an increase in the book value of fixed assets listed on the balance sheet of the enterprise and put into operation in the reporting year to their replacement cost.
• Debit 83 “Additional capital”

The amount of revaluation of an item of fixed assets, equal to the amount of its depreciation carried out in previous reporting periods and attributed to the account for accounting for retained earnings (uncovered loss), is credited to the account for accounting for retained earnings (uncovered loss).

• Debit 01 “Fixed Assets”
• Credit 84 “Retained earnings (uncovered loss)” - an increase in the book value of fixed assets listed on the enterprise’s balance sheet and put into operation in the reporting year to their replacement cost.
• Credit 02 “Depreciation of fixed assets” - an increase in the amount of depreciation of fixed assets as a result of revaluation.

The amount of depreciation of an item of fixed assets as a result of revaluation is credited to the account of retained earnings (uncovered loss).

• Debit 84 “Retained earnings (uncovered loss)”
• Credit 01 “Fixed assets” - reduction of the book value of fixed assets listed on the balance sheet of the enterprise and put into operation in the reporting year to their replacement cost.
• Credit 84 “Retained earnings (uncovered loss)” - reduction in the amount of depreciation of fixed assets as a result of revaluation.

The amount of depreciation of an object of fixed assets is included in the reduction of the organization’s additional capital formed from the amounts of the additional valuation of this object carried out in previous reporting periods. The excess of the amount of depreciation of an object over the amount of its revaluation, credited to the organization's additional capital as a result of revaluation carried out in previous reporting periods, is charged to the account of retained earnings (uncovered loss). The amount attributed to the account of retained earnings (uncovered loss) must be disclosed in the financial statements of the organization.

When an item of fixed assets is disposed of, the amount of its revaluation is transferred from the organization's additional capital to the organization's retained earnings.

• Debit 83 “Additional capital”
• Credit 01 “Fixed assets” - reduction of the book value of fixed assets listed on the balance sheet of enterprises and put into operation in the reporting year to their restored value.
• Debit 02 “Depreciation of fixed assets”
• Credit 83 “Additional capital” - a decrease in the amount of depreciation of fixed assets as a result of revaluation.

Residual value— the difference between the original (replacement) cost of fixed assets and the amount of accrued depreciation.

At their residual value, fixed assets are reflected in the balance sheet.

In accounting of fixed assets (FP) and intangible assets (IMA), along with the initial and residual value of assets, replacement cost is also distinguished. Let us recall that the initial cost of assets is the cost at which the object is reflected at the time of its acceptance for accounting. And the residual value of a depreciable object is its accounting value reduced by the amount of depreciation accrued on the object. What is meant by replacement cost?

Replacement cost of OS

The replacement cost of fixed assets is the cost at which an asset is accounted for after it has been revalued. We can say that the replacement cost of an asset is the revalued original cost of a fixed asset. It does not matter whether the initial cost of the fixed asset decreased or increased as a result of revaluation.

Revaluation of fixed assets is carried out to determine the real value of fixed assets. To do this, the initial cost of fixed assets is brought into line with their market prices and reproduction conditions on the date of revaluation (clause 41 of Order of the Ministry of Finance dated October 13, 2003 No. 91n).

Let us recall that a commercial organization can revalue groups of similar fixed assets at current (replacement) cost no more than once a year. In this case, the date on which the revaluation is made is December 31 of the reporting year (clause 15 of PBU 6/01).

Conducting a revaluation of fixed assets and, therefore, determining their replacement cost is the right, not the obligation of the organization. However, if fixed assets are once subject to revaluation, this will have to be done regularly in the future so that the accounting value of the fixed assets does not differ significantly from the current (replacement) cost.

Revaluation of fixed assets is carried out by indexation or direct recalculation of their value at documented market prices (clause 43 of Order of the Ministry of Finance dated October 13, 2003 No. 91n).

To determine the replacement cost of fixed assets the following can be used:

• data on similar products received from manufacturing organizations;
• information on price levels available from Rosstat or other organizations;
• information on price levels published in the media and specialized literature;
• technical inventory bureau assessment;
• expert opinions on the replacement cost of the asset.

We talked about how the revaluation of fixed assets to replacement cost is reflected in the accounting records of an organization in our separate article.

Replacement cost of intangible assets

Not only fixed assets, but also intangible assets of an organization can be revalued.

If there is an active market for certain groups of intangible assets, a commercial organization at the end of the year can revalue such groups of intangible assets based on data from this market. As with fixed assets, revaluation of intangible assets can be carried out no more than once a year (clause 17 of PBU 14/2007).

At the same time, like fixed assets, those intangible assets for which a decision was made to revaluate must subsequently be revalued regularly so that their accounting value does not differ significantly from the current market value (clause 18 of PBU 14/2007).

The level of materiality when deciding on the revaluation of fixed assets and intangible assets is determined by the organization independently and enshrines this in its.

Replacement cost is the cost of fixed assets, adjusted from the original value as a result of the revaluation of the object. Current legislation allows commercial organizations to regularly (no more than once a year) review the cost of fixed assets, focusing on changes in market prices and taking into account projected inflation.

The possibility of property revaluation exists for both fixed assets and intangible assets (intangible assets). The application of this norm is regulated by PBU 6/01 and PBU 14/2007, although in relation to intangible assets the legislator uses the term “current market value” with an approximate meaning to the concept of “replacement value”. Let's talk about how to calculate the replacement cost of fixed assets and what you should pay attention to.

Initial and replacement cost of fixed assets

Production assets serve for a long time, gradually wearing out and transferring their value to the finished product. Therefore, their accounting is structured so that you can immediately see the initial price of the object, its gradual loss (wear and tear) and the residual value. There are three costs of fixed assets: initial, residual and replacement.

The initial cost reflects the real costs of acquiring property (price of the object + costs of installation, transportation, etc.). It does not change, unless we are talking about reconstruction, completion or partial liquidation of the facility. The loss in value of assets is reflected in their valuation at residual value. This is the original cost reduced by the amount of wear and tear.

Over time and under the influence of an ever-changing market, the original cost no longer corresponds to the actual value of the property. Therefore, the question arises of restoring the price to reflect market realities. Such compliance is achieved through revaluation, and the value of the revalued asset becomes replacement value.

Original replacement and residual value

Let's talk in more detail about the categories of replacement cost. The cost of modern analogues of assets in relation to already used objects subject to revaluation is the full replacement cost. And since operating assets are already worn out to some extent, their restored value cannot be full, but only close to the market value and taking into account accrued depreciation.

And here the concept of original restored value is relevant. Those. after the revaluation of the object, its initial value becomes the initial replacement value, i.e., the original price of the asset at the current moment.

The revaluation rule is the proportional distribution of the increase (or decrease) in value to the asset itself and its depreciation, i.e. not only the price of the object is recalculated, but the amount of depreciation on it. The recalculated cost minus depreciation will be called the residual replacement cost.

How is the replacement cost of fixed assets determined?

To determine the replacement cost of an asset, different methods are used. Analyze:

• prices for similar objects according to manufacturers and trade organizations;
• information from statistical authorities,
• expert opinions on the current cost of similar operating systems.

The “new” cost of objects is established by indexation or direct recalculation based on data for similar products. As a rule, appraisers are involved in revaluation, who revaluate each object, taking into account all market criteria and depreciation of assets.

The revaluation procedure is preceded by a lot of organizational work. Necessary:

• select OS objects that will be revalued;
• enter into an agreement with a licensed appraiser;
• issue an order to conduct a revaluation, which should include a list of the property being valued. It states:

Name of objects;

Dates of their acquisition/manufacturing, commissioning.

The main criteria for determining the replacement cost of fixed assets for revaluation are:

Initial or current value (if the object was previously revalued) at the beginning of the reporting year;

Depreciation accrued over the period of operation of the facility.

Pursuing the goal of approaching the market value of fixed assets, revaluation regulates the original value, so the result of revaluation may be an additional valuation or a discount of funds.

Replacement cost: formula

Having established the value of the full replacement cost, it is possible to determine the replacement cost of fixed assets after revaluation. It is found by multiplying the full replacement cost by the ratio of the residual value to the original value (before revaluation). According to the formula:

C in = C p x K ots, where

C in – replacement cost of the object,

C p – initial cost,

K ots – evaluation coefficient.

Example

According to a specialist, the initial cost of the machine (RUB 100,000), which has been operating in the enterprise for 3 years (36 months), has decreased by 30% compared to market analogues. When revaluing the asset, a coefficient of 1.3 was applied and the replacement initial cost of the object was calculated:

C in = 100,000 x 1.3 = 130,000 rub.

To be fair, we note that the correction factor is not always used. The replacement cost of an object can be determined based on an analysis of the market situation and the price of analogue products, confirmed by documents.

Let's go back to the example:

After establishing the price of the machine at the current moment, it is necessary to calculate its current residual value. Let's calculate it using the formula:

C ov = C pv x C ost / C per, where

C ov – residual replacement cost,

C pv is the full (initial) replacement value, and C ost and C per are the residual and initial costs of the asset before revaluation.

Let’s assume that the service life of the machine established in the organization is 8 years (96 months). Then

C rest = 100,000 – (100,000 / 96 x 36) = 100,000 – 37,500 = 62,500 rub.

Let's substitute the values ​​into the formula:

C ov = 130,000 x 62,500 / 100,000 = 81,250 rubles.

Thus, the initial replacement cost of the machine on the day of revaluation amounted to 130,000 rubles, its current residual value increased from 62,500 rubles. up to 81,250 rubles, and accrued depreciation amounted to 48,750 rubles. (130,000 – 81,250) instead of 37,500 rubles. before revaluation.

Enterprises involved in the production process with a useful life of more than one year. Fixed assets wear out during use. The amount of wear and tear on the operating system is partially transferred to the cost of production.

To measure the volume of fixed assets, only natural physical units are used. These are, for example, units of equipment, square meters, etc. allows you to determine the degree of wear of fixed assets, gives the full dynamics of its practical use throughout its entire useful life.

Thus, the initial estimated cost is formed from the actual costs received at the time of acquisition. It remains unchanged and constant throughout its useful life and can only be revised during revaluation, or changed in the event of modernization or major repairs.

Replacement cost is the quantitative amount of costs in the form of depreciation, which is necessary for the restoration of worn-out objects, calculated taking into account all actual building codes, regulatory prices, as well as the market value of material resources and the necessary labor costs.

The replacement cost of an asset can be full or minus accrued depreciation. Thus, the full replacement cost is calculated based on the results, taking into account accrued costs. It also takes into account physical and moral obsolescence (wear and tear) of the OS. Physical wear and tear involves a reduction in original value as a result of deterioration of physical characteristics or partial loss of characteristics under the influence of natural factors. This can range from 1 to 5% of the cost of the initial assessment of the OS. Obsolescence provides for a reduction in the initial cost from 3 to 5% due to the widespread introduction of new models of equipment and individual components on the production market.

Such an assessment is unified and comparable over different periods of use, allowing analysis for subsequent volumes of cash investments for their complete reproduction or renewal. Moreover, this also makes it possible to most accurately calculate production costs for the production and subsequent sale of products, objectively calculate the cost of fixed assets in the event of their subsequent lease, and much more. Compared to the original value, the replacement cost can change either up or down. These changes depend on the price direction for installation work, productivity and transportation costs. The replacement cost minus depreciation is calculated by multiplying by the full replacement cost, taking into account the revaluation.

And one last thing. The residual value is the part of the cost that was not included in the cost of production in the form of depreciation.

Based on this, the replacement cost of fixed assets is equal to the cost of their subsequent renewal. Moreover, the amount of deviation of this value from their initial assessment largely depends on the growth rate of scientific and technological progress, the introduction of innovations and the level of inflation.