Integrated Depreciation Management System

Abstract

To solve the problem of separation of financial and tax accounting in terms of depreciation, the authors of the paper propose to use an integrated depreciation system. An integrated depreciation system is a system that combines various methods of depreciation aimed at decrease of the income tax and property tax in the initial periods with the intention of investment of the released funds into the reconstruction and modernization of machinery fleet and equipment with unconditional refund of unpaid tax sums in the following periods. The article describes an optimization mathematical model to substantiate the advantages of the proposed integrated depreciation system. As a depreciation method, the model involves a combination of such methods as: linear method, the method of the sum of the number of years (decreasing depreciation option) and the method of the sum of the number of years (increasing depreciation option). It is noted that these depreciation methods do not contradict the current legislation on taxes and charges. To prove feasibility of the proposed optimization model, a number of limitations were specified. The mathematical model presented in the paper led to the conclusion that only a combination of the method of the sum of years (decreasing depreciation option) and the method of the sum of years (increasing depreciation option) can give the greatest economic effect, consisting in increasing revenues to the budget of the profit tax and the property tax. It should be noted that the use of a linear depreciation method ultimately leads to lower budget revenues.