The Construction Of Dynamic Depreciation Model Of Fixed Assets In The Current Replacement Cost Accounting Perspective

Fixed assets, accounting for a large share of enterprise’s assets are the material basis of the enterprise development.The proportion of fixed assets in total assets in the large petrochemical, aviation, smelting enterprises, for instance, will be more than50%. The value loss of fixed assets is compensated by depreciating. The depreciation amount, as an essential section of expenses in every accounting period will directly influence accounting informations based on the incomes, estimated residual value, owners’ equity data, which will determine the related economic decisions made by the management, investors and bonds holders and further dominate the configuration of social whole resources, and even the updating of enterprises’ physical assets and the expansion of the ability to reproduce.With China’s further opening-up and the fast economic development, the overall price level has been being on increase in recent years. There are many flaws in the depreciation of fixed assets based on the historical cost. In order to ensure the book value of assets in the balance sheets can truly reflect the actual economic value of the enterprise assets and the value of the enterprises themselves, this article will analyze the main factors that affect the fixed assets depreciation by doing researches of the theories and methods of fixed assets depreciation. Meanwhile, according to the developed countries’ experience, it is proposed in the article to employ the current replacement cost as the valuation basis so as to eliminate the influence of growing price level on depreciation of fixed assets. Furthermore, the time value of assets has been introduced, by which transforms the original static depreciation process into a dynamic one with the methods of straight-line depreciation, sum of the yeas digits and double declining-balance.