Results for “Depreciation”

0200 Depreciation of fixed assets

Depreciation / amortization

Allocating the cost of a fixed asset or an intangible asset to expenses in portions over the period during which it is used.

Accounting policy

The set of methods and rules a company chooses for keeping its accounts, for example the depreciation method or the method of writing off goods. It is approved by an order of the company's head.

Carrying amount (net book value)

The value of a fixed asset or intangible asset that remains after accumulated depreciation (amortization) is deducted from its initial cost.

NAS No. 5

NAS No. 5 “Fixed Assets” sets the procedure for recognition, measurement, revaluation and depreciation of fixed assets. It provides for four depreciation methods: straight-line, units of production, double declining balance, and sum-of-the-years' digits (cumulative). For foreign readers: broadly corresponds to IAS 16 “Property, Plant and Equipment”. Approved by Order No. 133 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 09.08.2024, No. 3546); in force from 1 January 2025.

Perennial plantings

Trees and plants that bring benefits over many years: landscaping and decorative (ornamental) plants, fruit and berry trees, green walls and others. They are accounted for as fixed assets in account 0180, and their depreciation is accumulated in account 0280 (NAS No. 21, paragraphs 20 and 24).

Conservation (mothballing) of fixed assets

Placing a fixed asset into storage in the established manner so that it is temporarily not used. A mothballed item remains the company's property, but it is transferred to a separate account 0199 "Fixed assets in conservation (mothballed)" (NAS No. 21, paragraph 22). No depreciation is charged on fixed assets placed in conservation (NAS No. 21, paragraph 26).

Devaluation

A fall in the value of the national currency against foreign currencies. In the narrow sense it means the state lowering the official rate under a fixed exchange rate regime; in the broad sense, any depreciation of the national currency. As a result, imports become more expensive, while exports become cheaper for foreign buyers.

EBITDA

Profit before deducting interest expense, corporate profit tax, and depreciation and amortization of fixed assets and intangible assets (Earnings Before Interest, Taxes, Depreciation and Amortization). It is used to compare the ability of companies with different debt loads and depreciation policies to earn money from their core operations; it is not an official financial statement indicator.

Depreciable amount

The part of a fixed asset that is charged to expenses through depreciation over its useful life. Under NAS No. 5 it is found by deducting the residual value from the initial cost (or another amount substituted for it in the financial statements). The logic is simple: the amount recovered at the end of the period by selling or scrapping the asset is not written off to expenses. If the initial cost of the asset was later increased by capital expenditure, the calculation starts differently: the residual (carrying) amount on the day the works were completed and the asset was put back into operation is taken, and the residual value is deducted from it. Depreciation continues until this amount is fully recovered or the asset is derecognised.

Filling in the balance sheet (Form 1) line by line: which account balance goes on each line?

All lines of the balance sheet under Appendix 1 to the Regulation approved by Order No. 181: line code, the accounts in brackets and a plain explanation for each. Where depreciation, amortisation, the trade markup and the allowance for doubtful debts are deducted, which formula gives each total line, and how the appendix on overdue debts is prepared. At the end, a balance sheet filled in from the account balances of a small furniture workshop.

Make it ourselves or buy it ready-made: which costs really matter for the decision?

The bread a restaurant bakes itself costs 3 383 soum at full cost, while ready-made bread costs 3 200 soum. So is buying cheaper? No: tandoor depreciation and the share of rent remain whatever the decision. If only the costs that differ are counted, baking it ourselves saves 900 thousand soum a month. But if the freed-up space can earn income, the answer changes again.

An error found in last year's financial statements: what should you do? (NAS No. 1, Chapter 10)

Change in accounting policy, change in accounting estimate, material and non-material error: a decision table based on paragraphs 108–118 of NAS No. 1. Using «Sabo Mebel» as an example, we show how depreciation understated last year is corrected, how comparative figures are restated and what goes into the notes.

Repairing or modernising a fixed asset: when is the cost a period expense, and when does it increase the asset's value?

Not every sum spent on equipment is added to its value. Using three invoices at a sewing workshop, we separate repairs from modernisation and work out the journal entries and the new depreciation.

How is depreciation of fixed assets calculated?

What depreciation is, the four calculation methods under NAS No. 5, numerical examples and the related journal entries.

We want to take a loan of 240 million soums and buy equipment. Can our monthly cash flow cover the loan payment? Banks talk about a "debt service coverage ratio" — what is it?

In the auditor's report, after the opinion there is a short section called "Basis for Opinion". Is it just formal text, or can something useful be learned from it?

We acquired equipment under a finance lease (leasing); it still belongs to the leasing company. Do we show it on our balance sheet, and in which lines do we record the debt?

We have an accounting policy for bookkeeping. Do we also need an accounting policy for taxes, and what must be written in it?

Our plant has its own repair workshop: it repairs the machines of the main workshops and the office building, and also works on the construction of a new warehouse. Where do we accumulate the workshop's costs and how do we allocate them?

A farmer sold wheat to a mill, the mill sold flour to a baker, and the baker sold bread. If we add up the sales of all three, is that the value created in the country?

Two of us set up an LLC: one contributed his share in money, the other with his own machine. How do we show this in the accounts?

We set the useful life of a piece of equipment at 10 years. After 4 years the technology became obsolete, and it turned out that it would work for only 4 more years. Do we recalculate the depreciation of past years?

Our net profit is 50 million soums, but the money in our bank account has not increased much. How do I calculate cash flow from operating activities starting from profit?

To get a loan, we pledged our warehouse to the bank. Does the warehouse leave the balance sheet, and how do we show this in the accounts?