Recognition Criteria and Classification of Investment in Tangible Assets

Namig Garib Orujov

doi:10.13189/ujaf.2022.100104

Abstract

The aim of the study is to clarify and arrange the types of investment in tangible assets based on the practice of forming such assets in the world and Azerbaijan in particular. The article involves methods of analysis and synthesis in the development of criteria for attributing costs to investment in tangible assets. The dynamics of the investment in tangible assets of economic entities were analysed through the statistical analysis. The monographic method is applied to a comprehensive in-depth study of the types of investment in tangible assets, and the cause-and-effect relationships of their implementation. An abstract logical method was used to generalise and draw conclusions. The nature of investment in tangible assets was studied, taking into account the provisions of international accounting standards and other regulatory documents. An algorithm for identifying investment in tangible assets was developed, which provides for their consistent recognition from the moment the operation gets the attributes of investment activity and the subsequent distribution of investment by individual groups of assets to their final completion. The usefulness of the identification algorithm in making informed management decisions on the material investment in individual objects was determined. The classification of investment in the tangible assets of the company was determined, and the key types of investment were identified. The dynamics of the volume of investment in the tangible assets of Azerbaijani companies were investigated; an econometric model was developed to predict it, and the amount of investment in the tangible assets of Azerbaijani companies for the next five years was predicted. The prospects for further research include the search for directions for modernising the company's investment policy.

Highlights

The domestic economy enters a growth trajectory, putting us in front of the need to overcome the deep economic crisis caused by the intensification of the investment process
If the purpose of the transaction is the acquisition, creation, lease of long-term non-monetary assets that can be identified in the accounting, and to obtain economic benefits, profit or capital gains in the future, the specified investment activity will be considered an investment in tangible assets
World practice shows that such investments are an important catalyst for production and the basis for stable economic growth, both of individual economic units and the state

Summary

Introduction

The domestic economy enters a growth trajectory, putting us in front of the need to overcome the deep economic crisis caused by the intensification of the investment process. The world practice shows that investment in tangible assets is an important catalyst for production, the basis for a stable economic recovery, both of individual economic units and the state. Recurrent financial and economic crises, which are often based on destructive elements in investment processes, necessitate a revision of certain positions on the sufficient financial support for investment in tangible assets. The ambiguity in the interpretation of investments in tangible assets in tax accounting and bookkeeping, the lack of a clearly defined concept of “investment in tangible assets” in international practice causes inconsistency in the essential identification of this category in accounting standards, which negatively affects the accounting and information support for managing company’s investment processes. That is why there is a need to develop criteria and procedures for identifying investment in tangible assets

Objectives

Methods

Results

Discussion

Conclusion