Methods for determining economic (external) obsolescence. The concept of impairment

Methods for determining economic (external) obsolescence

The final step in the cost approach is the assessment of economic obsolescence.

Economic obsolescence (economic obsolescence ) is the loss of value due to external and general economic (often generating intra-industry changes) factors.

Reasons for economic obsolescence include:

reduction in demand for a certain type of output;
increased competition and narrowing of the market;
changes in the structure of stocks of raw materials, the nature of labor costs;
rising prices for raw materials labor force, transport or public utilities without a corresponding increase in the price of products;
economic recession and inflation;
high interest rates;
legal restrictions, including zoning;
security requirements environment at the level of state regulation.

Most weak side The cost approach recognizes the need to separately define economic obsolescence. This is due to the fact that economic obsolescence is a function of external influence, which is directed rather at the entire business as a whole (on all tangible and intangible assets), rather than on each individual asset or group of assets. Economic obsolescence is automatically taken into account when applying the income approach, but the specifics of the cost approach, in particular, lies in the fact that all types of depreciation, including economic, are calculated separately.

Economic obsolescence is associated with the influence of external factors both in relation to the machine itself and in relation to the entire industry. It is expressed in the reduction of the useful life of an object as a result of the impact of economic forces that cause changes in optimal use due to legislative innovations that restrict or impair property rights, and changes in the supply/demand relationship in the market. These factors can also be measured and defined as a percentage of the estimated machine's performance or potential use. There are times when a machine can be 100% economically obsolete.

Economic obsolescence is usually measured in terms of a decline in productivity (underutilization) expressed as a percentage. It is also measured by any direct loss to the individual components, such as the cost of removing it if it can be removed.

Underutilization. Exist good way measure specific forms of wear by applying the cost-to-power ratio. In any case, when the operating load of an asset or the entire plant is less than its design capacity, we can talk about loss from underutilization. This loss reduces capital investment from design capacity to actual operating level. For example, you are evaluating a machine that is rated at 1000 t/d but is actually operating at only 600 t/d. If you calculate equipment replacement cost based on 1000 t/d but capitalize operating losses at 600 t/d, there is a clear mismatch. This discrepancy lies in the fact that some of the unused capacity included in the cost estimate is not reflected in any way in operational obsolescence. This unproductive capacity must be taken into account in the wear assessment process.

The underutilization penalty is calculated as a percentage by comparing the actual capacity with the rated capacity using the following formula:

where power BUT - rated power; power AT - real performance; P is the scale factor.

This relationship is based on a costing technique where the costs of equipment of different capacities vary exponentially rather than linearly due to the effects of the law of economies of scale. In other words, as productivity increases, so do costs, but at a different rate. The same logic is used to calculate the amount of loss from underutilization. Scaling factors vary by equipment type and Labor/Material ratios. Factors range from 0.4 to just over 1.0.

Formula (5.6) was obtained as a consequence of the "Cost/Capacity" formula and implements the concept of "converting" unused capacities into depreciation, expressed as a percentage. If part of the investment is not used and does not bring any benefit due to external economic reasons, then with a cost approach this should be reflected in the present economic obsolescence.

It is important to note that this kind of adjustment for underutilization can apply to both functional and economic obsolescence. The main task of the evaluator is to identify the source (cause) of underutilization, which can relate both to the progress in the field of technologies used in the industry, and to external regulations.

Continuing with the example mentioned above, let's say you capitalize losses due to operational obsolescence based on a production level of 600 t/d. The actual underutilization related to unproductive capacity is 400 t/day. In accordance with the substitution principle, a prudent investor will not acquire these unproductive capacities, being unable to extract some benefit from them. If an enterprise is not operating at full capacity for economic reasons, then the losses due to underutilization are referred to as economic obsolescence. If there is a violation of the production balance ("narrow sections" of production), then inefficiency may well be of a functional nature (for example, FUT). Finally, although this does not happen often, it may be that the plant is not operating at full capacity due to physical deficiencies in the equipment associated with poor maintenance, delayed repairs or lack of spare parts. Then underutilization can be a consequence of physical wear and tear. In all cases, it is necessary to find out all the circumstances and use the obtained data accordingly. Let's look at some examples.

Example 5.16. Evaluation of reasonable market value in the use of the production line. Do you rate production line with a capacity of 1000 units / day, a service life of approximately three years, which is in excellent condition. Technically, it corresponds modern standards. Talking with the client, you will find out that for this type of product in recent times increased competition from foreign manufacturers. As a result, the client uses the equipment to produce only 750 units/day.

Assume a replacement cost of $1 million for a production of 1,000 units/day and a physical depreciation of approximately 15%. Your task is to determine the additional wear that is present within the cost approach.

Reduced operating (production) load is an element of economic obsolescence, as it is caused by external factors. AT this case It is advisable to make an adjustment for economic underutilization, which is calculated as follows:

The fair market value of this asset, obtained by applying the cost approach, is calculated as follows:

Replacement cost, USD 1,000,000

Minus physical depreciation (15%) 150,000

Equals replacement cost minus

physical depreciation, USD 850,000

Minus functional obsolescence

due to excess operating expenses 0

Equals replacement cost

minus FI and OFS, USD 850,000

Minus economic obsolescence (18.2%) 154,700

Equals reasonable market value of the installed equipment

in use, USD 695,300

Rounded, USD 700,000

AT this example There are several points worth discussing. First, note that the adjustment for underutilization is non-linear: a 25% reduction in productivity leads to 18.2% underutilization. Secondly, this amendment is subtracted after physical depreciation and functional obsolescence, even if there were none at all; economic obsolescence is independent of physical wear and tear and functional obsolescence. Third, a legitimate question can be asked about the appropriate level of productivity for costing using the cost approach. If a economic conditions are such that the long-term productivity is 750 units/day, it may be correct to calculate the replacement cost on this basis. Again, specific facts and circumstances need to be established and applied appropriately.

Using the underutilization adjustment is a way to measure one aspect of economic obsolescence under the cost approach. In practice, when relatively new assets that are not operating at full capacity due to economic reasons are valued, additional economic obsolescence may be present. Its quantitative measurement requires a detailed analysis of the enterprise as a whole, followed by the distribution of all losses due to economic factors by individual assets or groups of assets.

The method of analyzing the relationship "Age/Service Life" has been described above in relation to the determination of physical wear. Note that, under certain conditions, this technique can also be used to measure depreciation. Let's illustrate the ego with an example.

Example 5.17. Using the "Age/Lifetime" method.

Suppose we are evaluating the same car BUT , which is in Example 5.14, which contains enough information to use the Age/Duration method to calculate cumulative depreciation. The effective age of the asset is 6 years and the remaining economic life is 9 years. The asset will continue to operate for the rest of its life, hence the total economic life is 15 years (6 + 9). The cumulative wear is then calculated as a ratio of 6/15, or 40%.

Note that the percentage of physical depreciation from example 5.14 is equal to the percentage of cumulative depreciation in our example - 40%. The reason for obtaining the same figures is to assume that the remaining physical life of the asset is equal to the remaining economic life. The main difference between these two examples, however, lies in the application of a percentage to the corresponding level of cost of reproduction.

In example 5.14, following the principle of substitution, we compared the object being evaluated with a modern equivalent. All types of depreciation were deducted from the replacement cost, i.e. the top level of cost. Using the relationship between age and service life, we measured depreciation in relation to the working conditions and utility of this particular asset being valued (we did not compare this asset with its modern equivalent). Accordingly, the total wear of 40% in this case is correlated with the cost of reproduction.

The value of a particular asset of $78,000 is derived as follows:

Cost of reproduction, USD 130,000

Minus total depreciation, 40% 52,000

Reasonable market value

installed equipment

in use, USD 78,000

Using the Age/Life method, the asset will be used in the future, but cannot measure the effectiveness of its use.

In fact, the Age/Life depreciation measurement shows the number of years that an asset has already been used, and by subtracting this amount from the total estimated useful life, we get the number of years of useful life remaining. this asset. The underlying assumption of this method is that the utility of the asset is spread over its lifetime. evenly, those. The first year of operation does not differ in efficiency from the last. This is obviously not true, given the fact that the equipment in the last year of its service has already suffered from physical wear, functional and economic obsolescence; the ability of the equipment to make a useful contribution to the activity of the enterprise in the last year is certainly less than in the period when it was new. Marston, Winfrey, and Hempstead's book "Technology Evaluation and Depreciation" presents some depreciation methods based on the compound interest (present value) technique to overcome the aforementioned drawback of the age procedure. These methods take advantage of the fact that the benefit received from the use of an asset in the current year is worth more than the same benefit received in subsequent years. This approach provides a more accurate and realistic picture of cumulative wear (calculated using the Age/Life method), but is quite complex in practical application and is possible provided that the appraiser has at his disposal the relevant information.

Example 5.18. Measuring economic obsolescence (decreased sales due to a shrinking market).

Design capacity 1000 units/day (L)

Current (used) productivity 500 units/day ( AT ).

where t = 0,6.

Anson Marston, Robley Winfrey, Jean C. Hempstead. Engineering Valuation and Depreciation. Iowa State University Press, 1953. 508 p.

One of the main factors causing a decrease in the reliability of machines over time is the wear to which machines and equipment are subjected from the beginning of operation.

V.Yu. Belopashentsev, an automotive expert, a practicing appraiser of machinery and equipment since 1997, on methods for determining various kinds wear.

In the previous article, we examined methods for determining the degree of physical wear and tear of machines when evaluating them. The next material is about functional and external (economic) wear.

Functional wear of machines

Unlike physical depreciation, which is absolute, functional depreciation is relative: it is a loss of value by a machine (object of appraisal) as a result of the use of new technologies and materials in the production of similar equipment and an increase in operating costs.

To accelerate functional wear, i.e. the frequency of generations of machines and technologies is affected by scientific and technological progress.

In relation to evaluation issues, two sides of the possible difference between a new object and an old one are usually considered.

Based on cost items, the following groups of functional wear (obsolescence) are distinguished:

depreciation due to excess capital costs.
This wear is the result of technological changes, new materials or the inability to optimally use equipment, imbalances production process. Often this type of functional wear is called technological obsolescence.
The functional wear coefficient is determined by the formula:
K fun \u003d 1 - (Po / Pa) * n,
where Po is the performance of the old equipment being evaluated; Pa - performance of new equipment or equivalent; n - price drag coefficient.
excess wear and tear production costs.
This wear occurs as a result of improved technology or improved placement and layout efficiency. This type of functional wear is often called operational obsolescence.

Determining the depreciation of machinery and equipment caused by operational obsolescence includes the following steps

determination of annual operating costs when using the assessed object;
determination of annual operating costs when using an analogue;
determination of the difference in operating costs;
accounting for the impact of taxes;
determination of the residual period of the economic life of the evaluated object or the time to eliminate deficiencies;
determination of the present value of annual future losses at the appropriate discount rate.

Operational obsolescence can be thought of as the present value of future excess production costs. Depending on the type of excessive production costs associated with existing equipment, operational obsolescence is distinguished, caused by increased a) investment costs; b) operating costs.

External (economic) wear of machines

External depreciation is manifested in the loss of value caused by major industry, regional, national or global technological, socio-economic, environmental and political changes, for example, a reduction in supply and demand for a certain type of product, deterioration in the quality of raw materials, labor, auxiliary systems, facilities, legal changes.

There are two approaches to determining the amount of external wear:

1) capitalization of loss of income related to external impact;

2) comparison of sales of similar equipment in the presence and absence of external influences.

With enough data, the second approach is more preferable.

Economic obsolescence is influenced by a large number of factors, and it is not always possible to prove that impairment occurs precisely for one reason or another.

When applying the cost approach, underutilization of equipment due to external wear and tear can be estimated using relative indicators. Typically, such an indicator is the relative coefficient of underutilization of equipment:

In \u003d (In fact / In nom),

where B fact and B nom -), respectively, the actual and nominal outputs (in monetary terms) for a certain period of time.

The coefficient of external economic depreciation of equipment is equal to

K and, ext \u003d 1 - In

When determining the external economic depreciation of machinery and equipment, it is important to clearly understand the true reasons for the decline in output.

Cumulative (cumulative) depreciation of machines

The coefficients of physical, functional and economic depreciation are usually calculated as fractions or percentages of the cost of reproduction or replacement cost. To determine the coefficient of total (cumulative) depreciation, there are 1) additive and 2) multiplicative approaches.

With the additive approach, the total depreciation coefficient (K) is determined by adding the coefficients of physical, functional and economic depreciation.
K \u003d K physical + K fun + K ext
With the multiplicative approach, the basis for determining the depreciation coefficients is the cost, from which the types of depreciation previously taken into account are excluded. In this case, the total wear factor (K) is determined by the formula:
K \u003d 1 - (1 - K physical) x (1 - K fun) x (1 - K ext)

At income approach in general, no special accounting for any type of depreciation is required, since the impact of each of them is manifested in the amount of income generated by the object of assessment.

When defining a comparative approach, the basis for determining the cost of a machine is usually used market prices(Cang) identical objects or close analogues. It is believed that these prices already take into account the functional and external wear and tear of the equipment, which is practically the same as the object of assessment.

Therefore, it is required to determine only its physical wear and tear to adjust the prices of close analogues according to the degree of wear, if necessary:

C \u003d Tsang x (1 - Ki, physical, ots) / (1 - Ki, physical, an), where Ki, physical, ots; Ki, physical, en - coefficients of physical wear of the object of assessment and a close analogue, respectively.

When using the cost approach the process of determining the value (С) of the appraised object is reduced to determining the full cost of reproduction (Св) with subsequent accounting for depreciation due to the action of all three types of depreciation:

C \u003d Sv (1 - Ki, physical) x (1 - Ki, Fun) x (1 - Ki, ext).

The formulas for determining the wear coefficients given above show that the procedure for accounting for all three types of wear involves a certain sequence:

physical wear and tear is always taken into account first;
then functional;
then - external (economic depreciation).

Prepared by Natalia Panasenko

External (economic) depreciation- this is a loss of value due to external factors, such as: legislative changes that limit or worsen property rights, loss of the market, etc.

Since external depreciation is the result of external influence that affects the enterprise as a whole, and not on each object separately or a group of them, external depreciation is often assessed using the income approach. Among the causes of economic obsolescence are the following:

1) demand reduction;

2) increased competition;

3) changes in the structure of stocks of raw materials;

4) an increase in prices for raw materials, labor or utilities without a corresponding increase in the price of manufactured products;

4) legal restrictions;

5) changes in the structure of the goods market,

6) environmental factors.

The main reason for external wear and tear is the legally established restrictions on the use of the assessed objects in connection with changes in environmental standards and safety regulations.

The amount of external depreciation is equated to the level of expenses necessary for the modernization of machinery and equipment in order to comply with legal regulations.

When calculating the amount of external wear, the principle of substitution is used, i.e. take into account the usefulness of the object. Due to economic reasons, part of the equipment (investments, capacities, etc.) is not used and does not bring any benefit. And since the utility of an object due to underutilization is less than that of an object operating at full productivity, then its cost

decreases.

External wear factor associated with underutilization,

where: K in - coefficient of external wear;

R p- real power or real productivity of the object;

R n- rated power or rated performance

n– “braking coefficient”, Chilton coefficient.

Sometimes underutilization can cause functional obsolescence, and sometimes physical deterioration of equipment. For example, if an enterprise is not operating at full capacity for economic reasons, then the losses due to underutilization are attributed to external

wear; if the production balance is disturbed (there are narrow areas of production), then the losses can be attributed to functional wear. Underutilization can also occur for physical reasons, such as poor Maintenance, delayed repairs, lack of spare parts, etc. In all cases, the appraiser must identify the causes and concomitant circumstances that led to the underutilization of equipment in order to clearly separate the types of wear and obsolescence and correctly take them into account. External depreciation, caused by a decrease in demand for products, low purchasing power, is usually determined by an expert.

In general, external wear depends on the influence of too many factors. Therefore, before calculating the depreciation, it is necessary to deeply understand the situation not only at the enterprise, but also in related industries using similar equipment, and take into account regional and local features.

findings

Cost approach It is quite widely used to evaluate special and unique engineering objects, as well as in the evaluation of obsolete machines and equipment, the production of which is currently not carried out.

Advantages

Versatility. Ability to apply to various types of equipment, including special and unique.

The ability to more accurately take into account the impact of wear and tear (different units wear out to different degrees), make detailed assessments of the insured value and insurance compensation (different units have different degrees of risk), obtain property estimates that are convenient for its division, thanks to the calculation for individual pieces of equipment.

During the operation of production mechanisms, processes occur related to the gradual decrease in their working properties and changes in the characteristics of components and parts. The fact is that after a certain period of time they can lead to serious damage or a complete stop of the equipment. In order to avoid negative consequences of an economic nature, enterprises, as a rule, organize the process of competent management of depreciation and types of depreciation separately, and also update their fixed assets in a timely manner.

The concept of wear

Today, wear (aging) is commonly understood as a gradual decrease in the operational properties of units, products and production mechanisms as a result of a change in their size, shape or physico-chemical characteristics. It should be noted that the wear and types of wear that exist today appear and accumulate during operation. There are a number of factors that determine the rate of equipment aging. So, in a negative way, as a rule, the following points affect:

Friction.
Temperature regime (extreme - in particular).
Periodic, impulse or static loads of mechanical action and so on.

It should be noted that almost all types of equipment wear can be slowed down. To do this, it is advisable to rely on the following factors:

Constructive decisions.
Compliance with operating rules.
Use of high-quality and modern lubricants.
Timely scheduled preventive repairs and maintenance.

Due to all types of depreciation of fixed assets, a decrease in performance, the consumer cost of equipment or production mechanisms also decreases. It is important to add that the degree and rate of wear are determined by friction conditions, loads, and material characteristics. In addition, the design features of the equipment play an important role.

Types of wear

The classification of wear today is quite extensive. So, for a complete understanding, it is advisable to initially consider the information briefly, and then delve into the details. The aging category is subdivided into actual wear, which is accompanied by a change in the characteristics of the object; functional wear caused by the development of new technologies; external wear due to the influence of external factors. The first two types of depreciation of fixed assets are classified into removable and irremovable. In addition, the first group is subdivided according to the reasons that caused the aging of equipment, into wear of the first type (accumulates as a result of operation at normal rates) and wear of the second type (accumulates due to accidents, natural disasters and other negative factors). Judging by the flow time, then in the same group it is customary to single out continuous (technical and economic indicators decrease gradually) and emergency (instantaneous in time, for example, as a result of a cable breakdown or an accident at work) wear.

The second group, that is, such a type of depreciation of fixed assets as functional, is classified into moral (the main reason in this case is a change in the characteristics of products similar to this one, as well as a reduction in the cost of their production) and technological (the key reason is a change in the cycle in which, according to tradition, this object is included in technological plan) wear. In turn, obsolescence, based on cost items, changes in the structure of which have led to wear and tear, is divided into aging due to excess capital expenditures; obsolescence due to extremely high operating costs; aging due to a low level of ergonomics and ecology.

It is important to note that external wear is only irreparable. So, next, let's move on to the analysis of certain types of equipment wear, which should be given close attention.

By the nature of external influences

Depending on the characteristics of external influences on equipment materials, it is customary to distinguish the following types of aging:

Abrasive type of wear of objects. It's about about damage to the surface of mechanisms or products by small particles of materials of other equipment. This variety is especially characteristic in conditions of increased dustiness of production mechanisms. For example, when working in the mountains, at a construction site, in the production of materials or in agricultural operations.
Cavitation, which is caused by the explosive collapse of gas bubbles in a liquid medium.
Adhesive form of physical wear.
Oxidative aging. It usually occurs as a result of chemical reactions.
Thermal wear.
The type of wear is fatigue. It usually occurs when the structure of the material changes.

Types of wear and amortization

We figured out what types of wear are currently known. It is worth noting that the classification of the varieties of aging in accordance with the physical phenomena that cause it in the microcosm is in any case supplemented by a systematization associated with macroscopic consequences for economic life. So, in financial analytics and accounting, the concept of depreciation, which reflects physical aspect phenomena are closely related to economic term equipment depreciation. Depreciation should be understood as a reduction in the cost of production mechanisms as they age, and attributing part of this reduction to the cost of the manufactured product. The main goal here is the accumulation of funds on special depreciation accounts for the purchase of new equipment. production value or partial improvement of the old.

Physical deterioration

Types of wear, depending on the causes and consequences, are divided into economic, functional and physical. In the case of the latter, we are talking about the direct loss of design characteristics and properties of a piece of equipment during its operation. It is worth noting that such a loss can be partial or complete. In the first case, production mechanisms are subject to restoration, repair, which returns the original features of the products. In case of complete wear and tear in the assessment of equipment, it is subject to write-off. In addition to the power classification, physical wear has a generic:

The first kind: production mechanisms wear out in the process of planned use in compliance with all the standards and rules that are established by the manufacturer.
The second kind: a change in the characteristics of the equipment due to improper operation or the influence of force majeure factors.
Accident wear: A hidden change in the features of an object leads to its emergency failure, which happens suddenly. In this connection, a disaster can occur at the enterprise, for example.

It must be added that the listed types are applicable not only to the equipment as a whole, but also to its individual components (assemblies, parts).

functional wear

It is important to know that functional aging is a reflection of the process of obsolescence of fixed assets. We are talking about the appearance on the market of the same type, but more economical, productive and safe to use equipment. The production machine in physical terms can be quite serviceable. It produces products, however, the use of new technologies or modern models that periodically appear on the market makes the use of obsolete objects economically unprofitable. It must be borne in mind that functional wear has its own classification:

Partially obsolete: the machine is unfavorable for a complete production cycle, but quite suitable for a limited number of operations.
Complete aging: any use of the machine leads to damage. In this case, the piece of equipment is subject to dismantling and write-off.

There is also a classification according to the factors that caused functional wear:

Obsolescence (today there are three types of obsolescence depending on the reasons that caused it, discussed in previous chapters) implies the availability of identical, but more advanced, technologically modern models.
Technological wear and tear implies the development of fundamentally different technologies for the production of a similar product. It is important to add that this type of wear in one way or another leads to the need to change the entire technological chain, subject to a complete or partial renewal of the composition of fixed assets.

It should be noted that due to the occurrence new technology the composition of the equipment, as a rule, is reduced, and the labor intensity decreases.

Economic depreciation

In addition to temporary, physical and natural factors, the following economic factors indirectly affect the preservation of the original properties of equipment:

Falling demand for manufactured products.
Inflation processes. Prices for labor resources, raw materials and components of equipment used for production purposes are rising, but there is no proportional increase in prices for the final product.
Price pressure from competitors.
Price fluctuations in the commodity market, not related to inflation.
An increase in the cost of credit services that are used for operational work or for the purpose of updating fixed assets.
Legal restrictions related to the use of equipment that does not meet environmental standards.

Reasons for wear

It should be understood that the types and causes of wear of parts are interconnected. Next, we consider the main causes, as well as ways to determine the wear and tear of equipment, production mechanisms and products. It should be noted that in order to identify the causes and degree of aging, a commission on fixed assets is formed and operates at each enterprise. Today, the wear of production mechanisms is determined by one of the following methods:

Through observation, which includes visual inspection, as well as a complex of tests and measurements.
According to the period of operation. It should be borne in mind that it is calculated as the ratio of the period of use in fact to the normative one. The value of this ratio is the amount of wear in percent.
Through coarse-grained state assessment production facility, which is carried out using special scales and metrics.
Through direct measurement in monetary terms. In this case, the cost of a new similar unit of fixed assets and the cost of repairs associated with the restoration of the old one are compared.
With the help of yield further application. It is about assessing the decline in income, while taking into account the actual costs associated with the restoration of characteristics, compared with income in theory.

It should be added that the final choice related to a certain methodology is made by the commission on the main fund. At the same time, it is guided by regulatory documentation, as well as the availability of initial information.

Methods for accounting for equipment wear

Further, it is advisable to move on to the final aspect of such a broad topic as the wear and tear of production mechanisms, equipment, products and their individual components. Depreciation deductions, which are intended to be a compensation for the aging processes of equipment, can now also be determined using a number of methods:

Proportional or linear calculation.
Decreasing balance method.
Calculation made in accordance with the period of production use.
Calculation carried out according to the volume of the released product.

It is important to know that the choice of a specific methodology is implemented during the formation or deep reorganization of the structure. It is obligatorily fixed in the accounting policy of the enterprise. The operation of production mechanisms, equipment and miscellaneous products in accordance with generally accepted rules and regulations, as well as sufficient and timely deductions to depreciation funds, one way or another, allow organizations to maintain economic and technological efficiency at a competitive level. As a result, structures can continuously bring joy to their consumers with high-quality marketable products reasonably priced.

Conclusion

So, we have considered a fairly broad category of costs in terms of classification, its content and main features. In addition, we dismantled the causes of wear and how to assess it, as well as accounting. As it turned out, there are a lot of accounting methods, and all of them are fundamentally different, have their own advantages and disadvantages. In conclusion, it should be added that today the development of the real sector of the economy on the territory of the Russian Federation is becoming one of the most important tasks. However, it comes at a difficult time. Wear industrial equipment today reaches 78%, and borrowed funds are extremely expensive. That is why the relevant government agencies are working hard to develop resources that can help restore and further modernize the industrial sector in the country.

Introduction

1. Theoretical aspects determination of depreciation in property valuation

1.1 Concept, essence, types of wear

1.2 Place and role of economic depreciation assessment in property valuation

2. The practice of applying methods for determining economic depreciation in the assessment of property complexes

2.1 Income approach in assessing economic depreciation

2.2 The practice of applying methods for assessing economic depreciation based on a comparative approach

Conclusion

List of literature used

Introduction

Economic depreciation (EI), also called the external level, is the loss of property value as a result of the influence of factors external to the property. Various external factors (international, national, industry or local) affect the amount of income from the use of property, and thus its market value.

To determine whether EI exists, it is necessary to analyze all economic characteristics the object of assessment and its industry environment at a certain point in time - the date of assessment. This analysis should include the subject's income history and other factors that affect the condition of the asset. For small-scale real estate, the influence of local market conditions - zoning, the state of the local economy and unemployment - can be very significant. Large properties are more likely to be influenced by regional, national and global economies. Most types of property, including real estate, as well as other capital assets and components operating business(tangible and intangible assets, working capital), depend on local economic factors, but usually the state of the industry has the most significant impact on them.

Industry economic conditions affect all aspects of the business, of which real estate, machinery and equipment are a part. This category includes: cement plants, steel plants, pulp and paper mills, petrochemical, chemical and other processing plants; extractive industries such as oil or gas, coal mining; as well as property complexes of other industries. Typical data for industrial economics research include annual reports companies, reports of the Commission on securities, industry analytical reviews on changes in prices for products and raw materials, reports from investment banks and brokers, governments. With the help of this data, the appraiser can determine whether the income, and hence the value of the assets, will decline.

At the same time, for universal assets that can be used in various industries, user-specific EI factors are not applicable. For example, the EI value of a property complex for the production of car antennas is quite large, but the factory building can be used for other industries as well. So EI has a negative effect on the cost of equipment used in the production of car antennas, but not on the cost of the building.

The purpose of our work is to study methods for calculating the amount of economic depreciation taken into account when calculating the cost of property complexes.

To achieve this goal, it is necessary to solve the following tasks:

define wear, consider its types;

consider the essence of economic depreciation and its features;

consider the main methods used to assess the amount of economic depreciation.

1. Theoretical aspects of determining depreciation in property valuation

1.1 Concept, essence, types of wear

At the final stage life cycle enterprise (stages of accelerated aging, decline and upcoming closure, sale or re-profiling), there is an objective loss of one or another part of its regulatory production capacity and productivity.

Obsolete technological equipment and organizational and technical equipment of structural workplaces, as well as industrial real estate at this stage of the life of the enterprise, require increased costs for operation, maintenance and repair. Reconstruction, technical re-equipment, modernization of individual production sites and jobs, in anticipation of the upcoming closure of the enterprise, become economically unprofitable. At the same time, the solution of problems related to the assessment of what is more profitable is updated: to produce individual components, Assembly units and components of the manufactured final products at their place or purchase them on the side. As the enterprise ages, more and more often the second path is more economical. This is especially true for the structural workplaces of the procurement and preparatory work areas of the enterprise. Sometimes individual elements of industrial real estate fall into a dilapidated, or even emergency state, and in such cases, loss of production capacity and productivity of the enterprise are inevitable.

Under these conditions, after appropriate technical and economic calculations, inefficient, unprofitable structural jobs are closed (liquidated), which leads to the loss of part of the normative production capacity and normative productivity of the enterprise.

An objective phenomenon - a partial loss of the normative production capacity and normative productivity of the enterprise at the final stage of its life cycle should be considered as the economic depreciation of the enterprise.

The concept of depreciation used by appraisers and the concept of depreciation used by accountants are different from each other.

The term "wear and tear" in the theory of valuation is understood as the loss of the usefulness of an object, and hence its value, for various reasons, and not just due to the time factor. In accounting, depreciation is understood as a mechanism for transferring costs to the cost of production over the standard life of an object.

Depreciation in real estate valuation is considered as a loss of value at the time of valuation due to all causes. There are 3 types of wear: physical wear, functional obsolescence, economic obsolescence.

physical deterioration - any physical wear and tear of a tangible asset (other than land). For residential buildings, depreciation is determined in accordance with the document VSN-53-86 (R) (Official publication of Gosgrazhdanstroy, 88)

functional obsolescence, which can be caused either by obsolescence of an object or asset, or by the absence of any element, or by an excess of any element. Functional obsolescence can be recoverable when the cost of fixing a defect is less than the value added, and irremediable when the cost is greater than the value added. For example, the foundation is designed for a 3-story production building, but in fact we have a 2-story one. In this case, fatal functional obsolescence is caused by foundation redundancy.

economic obsolescence - caused by factors external to the property. Such factors may be congested streets or located near a residential area. industrial enterprise, or railroad. Economic depreciation is unrecoverable.

In practice, operational wear is also distinguished. The operational depreciation of an enterprise is understood as a premature, economically unjustified, removable loss of a part of structural and personal jobs at any stage of its life cycle, a situational violation of the normative regime of shift work and an arbitrary reduction in the nominal funds of the effective working time of its main workers. The operational depreciation of an enterprise arises and continues only through the fault of its management team, the level of professionalism of which does not meet modern requirements. Operational depreciation is typical for those enterprises that, first of all, have a rather weak marketing service and a sales service for finished products. By strengthening the staff of managers in these areas of management work, it is possible to achieve minimization of the operational wear and tear of the enterprise.

The formula for determining the operational depreciation of production facilities and business facilities - Iekp is the same as for assessing the level of their economic underdevelopment:

Iexp \u003d 1 - Opf / (Opn - Iep), (1)

where Opf and Opn are, respectively, the actual and standard income productivity of the enterprise in terms of net income;

Iep - economic depreciation of the enterprise in value terms, if it objectively takes place.

For the stage of development of production capacity, growth and maturity of the economy of the enterprise, Iep = 0. Operational wear can occur at any stage of the life cycle of an enterprise.

1.2 Place and role of economic depreciation assessment in property valuation

In a number of publications, the concept of economic depreciation is traditionally applied only in relation to the movable property of an enterprise (machinery, other machinery and equipment). At the same time, the integral Property Complex enterprise, including industrial real estate and the active part of its industrial fixed assets. Economic depreciation is characteristic of the enterprise as a whole, and not even some enlarged ones. certain types his property.

In the mentioned publications, one can find an unlawful equalization of economic depreciation and economic (in particular, production) underdevelopment of an enterprise. To assess the value of economic depreciation of an enterprise, these publications use the ratio: 1 - Opf / Opn, where Opf - the actual average annual output for several recent years the work of the enterprise, and Opn is the standard annual volume of production of these products. Thus, as the economic depreciation of the enterprise, these publications consider the economic consequences of unsatisfactory demand for its products, as well as gross shortcomings and unprofessionalism of its management team.