Depreciation reserve

Depreciation reserve is the accumulated depreciation at a specific time. 

The value of property items, such as land, buildings, and equipment, is usually reported as the value of the asset at the time of purchase. Depreciation reserves are also indicated, and the difference between the original property cost and the depreciation reserve represents the book value of the property. Thus, in depreciation accounting, separate records showing accumulation in the depreciation reserve must be maintained. In the customary account, reserve for depreciation is not actually a separate fund but is merely a bookkeeping method for recording the decline in property value. 

The straight-line rate of depreciation is a constant equal to 1 /r, where r is the life of the facility for tax purposes. Thus, if the life of the plant is lOyr, the straight-line rate of depreciation is 0.1. This rate, applied over each of the lOyr, will result in a depreciation reserve equal to the initial investment. 

The main reserves of coal are located in deeper layers (700-1200 m for sub-bituminous coal at the Tkibuli-Shaori deposit), with few faults and depreciations, making extraction activities very difficult and expensive. Based on international experience coal cannot play a significant role in the formation of the country s energy balance over the foreseeable future. 

Figure 122 shows an estimate of ammonia production costs at various locations. In this figure the capital-related costs are based on a debt/equity ratio of 60/40. With 6 % depreciation of fixed assets and spare material, 8 % interest on debts and 16 % ROI on equity, corresponding to a total of about 16.5 % of the total capital involved. The total capital includes the LSTK price for plant and storage, cost of the off-sites for an industrialized site, in-house project costs, spare parts and catalyst reserves, working capital. 

Properties, plants, and equipment Accumulated depreciation, depletion, and amortization Valuation of accounts and reserves Short-term borrowing... 

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