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The role of sub-functions in the effective implementation of accounting and economic functions of depreciation

Vol. 22, Iss. 8, AUGUST 2019

Received: 15 July 2016

Received in revised form: 19 October 2016

Accepted: 2 November 2016

Available online: 15 August 2019


JEL Classification: D24

Pages: 930–950

Krupina N.N. North-Caucasus Federal University, Pyatigorsk Branch, Pyatigorsk, Stavropol Krai, Russian Federation

ORCID id: not available

Subject The research investigates the role of sub-functions in the effective implementation of accounting and economic functions of depreciation. The research focuses on areas for improving the interaction mechanism of the functions in line with the specifics of the economic nature of the sub-functions.
Objectives The research provides the rationale for considering mutually related sub-functions of accounting and reproductive functions of depreciation. I also describe sub-functions of accounting (financial) and reproductive (economic) functions of depreciation, specify the substance and forms of their sub-functions. The article outlines strategic scenarios for implementing the sub-functions of depreciation to confer necessary dynamism to cash flows. I identify key conditions for reproductive balance of fixed capital.
Methods The research relies upon a systems approach, abstraction, logic and comparative analysis.
Results The article discusses the way the function and sub-function are interpreted, and specifies basic requirements of their performance and the content of accounting and economic functions of depreciation. I review whether it is reasonable to exert an organizational and financial effect on cash flow dynamics to ensure reproductive balance of fixed capital. I present a matrix setting forth strategic areas of depreciation policies and possible trends in cash flows.
Conclusions and Relevance The depreciation sub-functions are timing and spatial forms of various aspects of mutually related processes of accrual, accumulation and use of depreciation. Depreciation sub-functions shape trends in the formation and use of depreciation resource, with the balanced pace being ensured in line with key aspects of depreciation. As specialists acquire a broader understanding of the economic nature of depreciation sub-functions, it will lead to more active use of progressive schemes, thus ensuring the sustainable cash flows and reproductive balance of fixed capital. The findings may be useful for the practice of depreciable property management and formulation of effective depreciation policies.

Keywords: accounting, reproductive, depreciation, balance, strategic


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