Impact of Depreciation Deduction Calculation Method on Financial Soundness Improvement of Economic Agents

¹ State University of Management, 99, Ryazansky Prospekt, 109542 Moscow, Russian Federation
² Financial University under the Government of the Russian Federation, 49, Leningradsky Prospekt, 125993 Moscow, Russian Federation

^* Corresponding author: myv1@rambler.ru

Abstract

The purpose of this paper is to prepare suggestions on the use of capital depreciation methods as the key tool of industrial enterprise and organization financial soundness improvement that provides the gained profit increase, and thus the capital position.The paper solves the following issues: 1) In the result of comparative analysis of specific features, advantages and disadvantages of depreciation accrual methods, indices of average annual manufacturing capacity actual employment in the context of the most important types of output industrial products it was concluded that the majority of such methods (except the method for depreciation accrual in proportion to the gross output) doesn’t consider the actual load of process equipment; 2) the methodological approach to modification of average annual manufacturing capacity actual employment was substantiated by introducing the calculation formula and the coefficient of average annual manufacturing capacity actual employment; 3) calculations on annual 2016 and 2017 returns were carried out for several economic activities in order to assess product cost reduction (growth of profits) due to the proposed methodological approach.