Own sources of financing investment

The most reliable for the organizations are their own sources of financing investment. Ideally, every business organization should always strive for self-financing, then no problem of where to find sources of financing, the risk of bankruptcy. There are other advantages. For example, self-financing enterprise development means it is a good financial position, and also has an advantage over competitors who have no such possibility. The main sources of financing their own investments in any business entity are net income and depreciation. Profit as a source of investment finance is well known that the main purpose enterprise in a market is to maximize profits. It is the main financial results of the company. Book profit in the enterprise consists of the following components: profits earned from the sale of goods (works, services), income from the sale of the property business, income from non-sales operations, costs associated with non-sale transactions. Gross profit is taxable base for the calculation of income tax. The company interested in the profit that remains in his possession, ie, the net profit. In today's enterprise environment independently distribute profits retained in their possession. And the question immediately arises: how to most efficiently allocate this money? It can be sent to: industrial development, housing, vacation homes, kindergarten and other non-production facilities, payment of dividends, if a joint stock company; charity. For the rational use of profits should be well aware the technical condition of the company at present and the future, as well as the social status of the collective enterprise. Definitely you can answer that profits should be sent to the company's development in the event that the level of technological development of enterprises is low, which is a hindrance to competitive products and the possible reasons ¬ Noah bankruptcy. Thus, the distribution of profits in the enterprise must be justified economically and socially. The enterprise must adhere to this important rule: profits should contribute to the long-term plan for the company. In many cases, the primacy of production in the distribution of profits due to the fact that the development of production ultimately lead to weight gains and, therefore, continue to contribute to solving social problems and the collective enterprise. Profit as a source of financing real investment for reconstruction and technical re-equipment company, has a positive aspect for the company and to the extent that these profits are not subject to income tax under the existing tax laws. This privilege can not reduce the actual amount of income tax (calculated before deduction of benefits) by more than 50%. But in this case, the company receives a significant benefit for income tax. Depreciation is a source of investment financing Recall that the depreciation - the process of transfer of fixed assets for the manufactured products within their rated service life. Fixed assets include buildings, structures, work and power machines and equipment, measuring and control instruments and devices, computers, vehicles, industrial and household equipment and other life than one year and cost more than 100 MMOT. Fixed assets in the manufacturing process gradually obsolete and worn out, ie, they change their original settings. The cost of fixed assets shall be repaid by depreciation. Depreciation is the major source of investment finance. They are designed to provide not only simple but also to some extent expanded reproduction. In developed countries, depreciation up to 70-80% cover the needs of enterprises in investment. With the transition of our economy to a market value of depreciation as a source of investment finance has also improved. This is primarily due to the annual revaluation of fixed assets and loss of many businesses. The advantage of depreciation as a source of investment compared to other lies in the fact that, for any financial situation of the company, this source has a place and always at the disposal of the company. In recent decades, determining the direction of development of production become NTP, which is formed under the influence of new macroeconomic proportions. They consist in changing the relationship between compensation and capital formation, savings and investments. This leads to the separation of size and speed of depreciation of the wear and turnover of fixed capital (the active part). Need to update the fixed assets due to competition, forcing to produce the accelerated write-off of equipment for the purpose of education depreciation for subsequent investments in their investment. Thus, there is intensive reproduction. Because depreciation deductions become its own form of existence and motion, and cease to be an expression of physical depreciation of fixed capital, is the blurring of boundaries between the depreciation fund, and net income, funds recovery and storage. In other words, expands and becomes more stable financial base for investment. Thus, depreciation is becoming an important instrument for managing the investment of the company. At present, many countries used the accelerated depreciation policy, first used in the mid 40s in the UK. Its essence lies in the possibility of depreciation of fixed assets in a shorter time and at higher rates. In recent years the practice of accelerated depreciation is becoming more widely used in the Russian Federation. The amount of depreciation in the enterprise depends on several factors: the average annual value of fixed assets at the disposal of the company; revaluation of fixed assets, accrual method of depreciation, accelerating scientific and technical progress. Consider Bole detail these factors influence the value of depreciation deductions. The average annual cost of fixed assets depends on the size and specificity of the enterprise, species composition and other factors. Any organization has the right to not more than once a year (at the beginning of the year) to overestimate the fixed assets at replacement cost by indexing or direct conversion of the documented market prices, with such differences arising on additional capital organization, unless otherwise stipulated by legislation of the Russian Federation. The revaluation of fixed assets is necessary to consider not only their physical but also obsolescence. Biased overestimation may lead to an overstatement of fixed assets, the main production funds will not respond to their market value, the average annual cost increase of BPA, and hence the value of depreciation allowances, which would entail an increase in production costs and reduced competitiveness. In addition, the increased property tax of the enterprise. From this it follows that the revaluation of fixed assets should be based on a thorough feasibility study. The amount of depreciation as a source of financing of investment depends on the method of their calculation. According to the Regulation on accounting "Accounting for fixed assets" PBU 6 / 97 Depreciation of fixed assets may be made one of the following calculation of depreciation: a linear, declining balance method, depreciation is the sum of number of years of useful life of the asset, depreciation is proportional to the volume of production (works). Use of one of the ways of a group of homogeneous fixed assets is over its useful life. In this calculation of depreciation during this period shall not be suspended, except for finding objects in the reconstruction and modernization of the decision of the head of the organization and transfer to conservation for more than three months. The annual amount of depreciation accruals determined by: the linear method - based on the original project cost of fixed assets and depreciation, calculated on the basis of the useful life of the object under declining balance method - based on the residual value of fixed asset at the beginning of the year and the depreciation calculated on the basis of the useful life of the facility, with the method of depreciation for the sum of number of years of useful life - based on the initial value of the property, plant and equipment and the annual ratio where the numerator the number of years remaining until the end of the life of the object, and the denominator - total number of years of life of the object. During the year, depreciation on fixed assets are charged monthly regardless of the method of calculation in 1 / 12 of the annual amount. In seasonal industries the annual amount of depreciation on fixed assets is charged evenly over the period of the organization during the year. In the method of depreciation in proportion to the volume of goods (works) depreciation calculated on the basis of the natural rate of output (work) in the reporting period and the ratio of the initial value of the property, plant and equipment and the estimated volume of goods (works) for the entire useful life of a fixed asset. The useful life of property, plant and equipment is defined by the organization when making an item of property to accounting. Under the useful life means the period during which the fixed asset generates income or is the organization to accomplish its goals. Determining the useful life of an item of property at its absence in the technical specifications or failure to identify in a centralized manner is based on: the expected useful life of the facility in accordance with the expected performance or capacity of the enterprise; the expected physical wear and tear, which depends on the mode of ex ¬ exploitation (number of shifts) , the natural conditions and the influence of aggressive environment, a system of regular preventive repairs; legal and other restrictions on the use of the object (eg, lease). When calculating the depreciation of fixed assets acquired through budgetary allocations, is taken into account the value of property minus the value of amounts received. Depreciation on fixed asset start on the first day of the month following the month the adoption of this object to the accounting and credited to the full repayment of the value of this object or its cancellation with the accounting in connection with the termination of property rights or other proprietary right. Depreciation on fixed asset terminated on the first day of the month following the month in full repayment of the value of the object or cancellation of accounting. Accrual of depreciation shall be suspended for a period of recovery of fixed assets, the duration of which exceeds 12 months. Depreciation charges on fixed assets are recognized in the accounting period to which they relate and are charged regardless of the outcome of the organization in this period by the accumulation of the respective amounts in a separate account. Selecting one or more ways to charge depreciation is an important element in accounting and depreciation policy of the enterprise. The use of accelerated methods of depreciation allows for a shorter period of time to accumulate sufficient capital allowances, and then use them for reconstruction and technical re-equipment of production, ie is an enterprise there are big investment opportunities. This is the first positive point of accelerated depreciation. Second win in the enterprise of accelerated depreciation is that the cost of production in the early years of the asset is increased by an additional depreciation (AA), and the profit will decrease by the same amount, and consequently, the company will pay less income tax. Accelerated depreciation is advisable to carry out if the company is on track, and the cost of output is much lower than the competition. If the company is in dire financial straits due to lack of competitiveness of products or for other reasons, in this case it is better to renounce the use of accelerated depreciation. Based on the foregoing, the following conclusions: 1) the company any way to charge depreciation accounting policies are defined, has the right to use, 2) ways to the first years of operation of the active part of fixed assets to accelerated depreciation, should be used in enterprises with financially sound, and 3) in enterprises where there is a strict dependence of physical depreciation of the degree of exploitation, it is advisable to use the method of depreciation is proportional to the volume of output, and 4) if the financial situation of enterprises is extremely difficult, and the production is not competitive, especially on the sales price, it is advisable to use the method that minimizes the depreciation. So, the choice of calculating depreciation - not an idle question, and should be focused on the development of accounting and depreciation policies in the enterprise. The value of depreciation in the enterprise depends on the rate of acceleration of STP. The introduction of new and advanced in the company due to the acquisition of modern equipment and technologies, which are much higher than usual. The acceleration of scientific and technical progress in the enterprise is hardly possible without the implementation of accelerated depreciation in order to prevent excessive physical and moral deterioration. All this eventually leads to an increase in depreciation. To calculate the depreciation to be recognized as an expense in the reporting period, for a fixed asset should be quantified: the initial cost of the asset, depreciation cost, useful life, depreciation method. Depreciation on the plant should be used based on their economic substance to the simple and expanded reproduction, ie, to finance real investment. And more specifically, they should be used for the following purposes: to purchase new equipment to replace the retired, the mechanization and automation of manufacturing processes for carrying out R & D, to modernize and update the product to ensure its competitiveness, the reconstruction, maintenance upgrading and expanding production to new construction. Unfortunately, many enterprises depreciation are used entirely for other purposes, including working capital, is not peculiar to their economic purpose. For more efficient use of depreciation as an investment resource for enterprises to carry out the depreciation policy.