# How To Calculate The Wear Factor

## Video: How To Calculate The Wear Factor

Enterprises, carrying out commercial activities, constantly acquire items of fixed assets of various periods of use. These include buildings and structures, machines, mechanisms, and more. But any equipment is subject to moral and material obsolescence. To correctly determine it, a wear factor is introduced.

## Instructions

### Step 1

First of all, you need to find out what was the initial cost of the acquired item of fixed assets. These data can be emphasized from primary documents. These are invoices, checks, waybills and more.

### Step 2

Next, you need to figure out the depreciation rate. This concept means a predetermined percentage that is written off from the original cost of the object in order to compensate for its depreciation. For example, the cost of a car is 800,000 rubles, and its useful life is 10 years. Let its price be 100%, then the percentage depreciation rate will be 100% / 10 years = 10% (in absolute terms, 80,000 rubles).

### Step 3

Now, having understood the necessary data, you can calculate the depreciation rate, which is defined as the ratio of the amount of depreciation deductions for the period of its use to the original cost of the item of fixed assets. For clarity, you can continue with the example with a car. Let's say that it has been in operation for 6 years. This means the number of depreciation deductions for this period will be 6 * 80,000 = 480,000 rubles. The wear rate will be: 480,000 / 800,000 = 0.6