2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Fixed assets are tangible and intangible assets that are used in the production of goods and services, while remaining in their original form. The fixed assets of the enterprise include various buildings and structures, warehouses, roads, devices that transmit various types of energy, vehicles, equipment for the production of goods or services, tools, green spaces.
The main features of fixed assets are:
1. The object is intended for the production of products or the provision of services.
2. The object has been involved in the creation of goods or the provision of services for more than 12 months.
3. The item is not for resale.
4. The object must bring profit to the enterprise.
Fixed assets in terms of management accounting are divided into production and non-production. An analysis of the fixed assets of an enterprise, as a rule, is applied to those that are used in the production of products, that is, production. Non-production include those that do not take part in the production cyclemanufacturing products, however, improve the social infrastructure of the enterprise.
With a certain frequency, the terms of which are set by the management or the owners, an analysis of the fixed assets of the enterprise is carried out. This analysis is intended for the top management of a company or enterprise, as well as for middle managers. It helps to understand how the existing production is provided with resources to produce the required volumes of products, how long the fixed assets are used, to what extent they are involved in production, and what part of them needs to be replaced due to technical and obsolescence. In order to find out how the enterprise is provided with fixed assets, such an indicator as capital-labor ratio is used. The return on assets indicator helps to understand how great the return on the use of fixed assets used in production.
Analysis of fixed assets of the enterprise begins with the study of indicators of the availability of fixed assets, their movement and the study of the structure of funds and its changes. After the complete picture of the presence and structure has been clarified, the next stage of the analysis is started. An analysis of the movement of fixed assets of an enterprise serves to find out which fixed assets continue to participate in the production cycle, which are decommissioned, and which are subject to decommissioning. Also, this analysis helps to resolve financial issues about which financialcosts are expected to the enterprise for the acquisition of new funds or a complete refurbishment in order to improve product quality and the technological cycle.
All these indicators are calculated by the economic division of the enterprise. The analysis of the fixed assets of the enterprise carried out by the employees of the department helps the management in making decisions such as the need to replace equipment, expand or reduce production volumes, the efficiency of the enterprise's capacity, the profitability of the enterprise as a whole and the profitability of products, increase or decrease jobs, the need to re-equip production facilities, or their complete replacement with new equipment for more efficient operation of the enterprise.
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