Federal Accounting Standard 6/2020: Disputable issues of using some aspects of depreciation of fixed assets

Abstract

Subject. Currently, it is still important to choose how depreciation is charged, since this exactly reflects how future economic benefits of fixed assets are allocated over time. Amendments to the Russian laws on the use of Federal Accounting Standard (FAS) 6/2020 Fixed Assets helped update not only the procedure, but also the terminology. This totally influence how depreciation is recognized as per accounting policies of a firm. Objectives. The study focuses on the specifics of regulation and accounting for depreciation of fixed assets. Methods. The methodology includes the methods of analysis, systematization, comparison and generalization of regulatory sources and scientific literature on the subject. Results. We conducted the critical analysis of FAS 6/2020 in terms of using depreciation aspects, which relate to the useful life of a fixed asset, its drop value and depreciation method. Having analyzed regulatory documents, we summarized requirements to the useful life of fixed assets. Conclusions and Relevance. Practical issues of the drop value assessment should be resolved with respect to international practices. We also suggest non-governmental regulators of the Russian accounting practice should outline guidelines for the assessment of the drop value. There are still pending issues concerning the calculation of depreciation when a fixed asset is not used each day of a month. The depreciation calculation method should be stipulated in accounting policies, like aspects of revising depreciation elements. Considering the use of FAS 6/2020, accounting policies should be updated to formulate the content of changed aspects. The findings may prove useful to accountants when updating accounting policies on the use of depreciation methods in 2022 and onward.