Determination of service life of road machines and mechanisms and features of depreciation charges calculation

published:
Number: Issue 21(2020)
Section: Economy. Management
The page spacing of the article: 7-17
Keywords: road machine, deterioration, mechanisms, depreciation charges rates, fixed assets, service life
How to quote an article: Artem Bezuglіy, Yuliya Bibyk, Ihor Hresko Determination of service life of road machines and mechanisms and features of depreciation charges calculation // Dorogi і mosti [Roads and bridges]. – 2020. – Iss. 21. – P. 7-17. [in Ukrainian].

Authors

M.P. Shulgin State Road Research Institute State Enterprise - DerzhdorNDI SE, Kyiv, Ukraine
http://orcid.org/0000-0003-3883-7968
M.P. Shulgin State Road Research Institute State Enterprise - DerzhdorNDI SE, Kyiv, Ukraine
https://orcid.org/0000-0002-7175-7436
M.P. Shulgin State Road Research Institute State Enterprise - DerzhdorNDI SE, Kyiv, Ukraine
https://orcid.org/0000-0002-7197-8909

Summary

Introduction. To ensure an efficient operation of road enterprises, the precondition will include the availability of a modern material and technical base, an adequate state of fixed assets and the implementation of new technologies. Proper understanding of the concept and functions of depreciation will allow reasonably solving the issues related to the assessment of fixed assets, the establishment of optimal terms of their using, the definition of depreciation charges calculation methods, the development of depreciation charges rates, the formation and the use of depreciation fund that will allow the implementation of effective depreciation policy.

Issue statement. Research of the methods and principles by which depreciation charges is calculated is important in terms of generating the funds needed to renew or repair road machines and mechanisms. Depreciation charges have a leading role in the structure of financing sources of road enterprises in the reproduction of such fixed assets as road machines and mechanisms. Indicators included in the cost structure of operating the road machines and mechanisms. Determination of depreciation charges of road machines and mechanisms is a necessary economic process, since depreciation charges is a required component and make a significant percentage of the cost of one machine per hour.

To the research and depreciation issues, its economic essence and improvement many scientific works of Ukrainian scientists-economists are devoted, in particular: Belousov A. A., Kuzhelnyi M. V., Vyhovska N. G., Linnyk V. G., Kuzminskyi A. M., Bondar M. I., Butynets F. F., Shvets V. G., Chumachenko M. G., Sadovska I. B., Petryk O. A., Osadchyi Yu. I. At the same time, the issue of choosing the most optimal depreciation charges calculation method which impacts on the formation of operating profit and the nature of the reproduced process at the enterprise is quite relevant.

One of the required prerequisites for the calculation of depreciation charges is the free choice of depreciation method which will be the most expedient and most effective in facilitating the process of renovating the fleet of road machines and mechanisms that is in operation and need to be renovated or repaired. At the same time, the depreciation method is one of the main economic levers of the depreciation policy implementation and regulation of the activity of road enterprises and provides a reflection of the degree of deterioration of road machines and mechanisms. Thus, the correct choice of depreciation charges calculation method allow optimizing the financial cost on maintenance and repair [1] of road machines and mechanisms and minimizing taxes and speeding up the process of renovating the road machines and mechanisms involved in road works.

ObjectiveThe purpose is to identify the theoretical and practical features of the road enterprise depreciation policy, justification of proposals for the choice of the most optimal depreciation calculation method of road machines and mechanisms for improving the activities of enterprises of road industry.

Materials and methods. The issues of depreciation charges are paid much attention today. The main focus is on the issues of efficiency and areas of using the depreciation funds, studies of the impact of using different depreciation methods on the results of enterprises activity. The analysis of the depreciation charges calculation methods makes it possible to conclude on the choice of the most optimal method for the further efficient allocation and purposeful use of the financial assets of the depreciation fund.

Results. The article analyzes the methods of depreciation charges calculation which are stipulated by regulations [2] and the provisions [3], their advantages and disadvantages are revealed. The result of the work is practical recommendations on the application of the most expedient method of depreciation calculation of road machines and mechanisms used directly in the works fulfillment on new construction, reconstruction, overhaul, current repairs and operational maintenance of public roads with the observance of the operating terms [4].

Conclusions. A practical approach to calculate depreciation charges by the most optimal and cost-effective method and information on the useful life of road machines and mechanisms will help the enterprises of road industry to obtain and accumulate the required financial investments to further renovating the fleet of road machines and mechanisms.

References

  1. Standard of organization of Ukraine (SOU 42.1-37641918-121:2014) Normy finansovykh vytrat na tekhnichne obsluhovuvannia ta remont dorozhno-budivelnykh mashyn i mekhanizmiv (Rates of financial costs for maintenance and repair of road-building machines and mechanisms). Kyiv, 2014. 21 p. (Information and documentation) [in Ukrainian].
  2. Podatkovyi kodeks Ukrainy of 02.02.2010 N 2755-VI // Database of Legislation of Ukraine / Verkhovna Rada of Ukraine URL: https://zakon.rada.gov.ua/laws/show/2755-17 (Last accessed: 29.04.2020).
  3. Pro zatverdzhennia Polozhennia (standartu) bukhhalterskoho obliku 7 «Osnovni zasoby»: Order of the Ministry of Finance of Ukraine of 27.04.2000 N 92  // Database of Legislation of Ukraine / Verkhovna Rada of Ukraine. URL: https://zakon.rada.gov.ua/laws/show/z0288-00 (Last accessed 23.09.2019).
  4. Standard of organization of Ukraine (SOU 42.1-37641918-064:2019) Road machines and mechanisms. Service life and depreciation rates (Dorozhni mashyny ta mekhanizmy. Stroky ekspluatatsii ta normy amortyzatsii). Kyiv, 2019. 59 p. (Information and documentation) [in Ukrainian].
  5. Stelmashchuk A.M. Amortyzatsiinyi faktor u vidtvorenni osnovnykh zasobiv pererobnykh pidpryiemstv APK (Depreciation factor in reproduction of fixed assets of processing enterprises of agro-industrial complex). Ìnnovacìjna ekonomìka. Ternopil, 2014. № 6. P. 66–72. URL: http://nbuv.gov.ua/UJRN/inek_2014_6_13 (Last accessed: 29.04.2020) [in Ukrainian].
  6. Liubar O.O. Amortyzatsiia: ekonomichna sutnist, osoblyvosti narakhuvannia ta vidobrazhennia v bukhhalterskomu obliku (Depreciation: economic essence, features of calculation and reflection in accounting). Ekonomìka, fìnansi, menedžment: aktualʹnì pitannâ nauki ì praktiki. Vinnytsya, 2017. № 4. P. 117-131. URL: http://nbuv.gov.ua/UJRN/efmapnp_2017_4_13 (Last accessed: 29.04.2020) [in Ukrainian].
  7. Pro zatverdzhennia Metodyky tovaroznavchoi ekspertyzy ta otsinky kolisnykh transportnykh zasobiv: Order of Cabinet of Ministers of Ukraine of 24.11.2003 N 142/5/2092 // Database of Legislation of Ukraine / Ministry of Justice of Ukraine. State Property Fund of Ukraine. URL: https://zakon.rada.gov.ua/laws/show/z1074-03 (Last accessed 23.09.2019) [in Ukrainian].
  8. Standard of organization of Ukraine (SOU 42.1-37641918-064:2019) Dorozhni mashyny ta mekhanizmy. Richni normatyvni narobitky (Road machines and mechanisms. Annual normative work hours). Kyiv, 2019. 47 p. (Information and documentation) [in Ukrainian].

Archives