A special fund for the renewal of fixed assets formed by accruing depreciation expenses of fixed assets. Also known as basic depreciation fund. Fixed assets play a long-term role in the production process. During the whole use period, although the original physical form is maintained, due to gradual loss (tangible loss and intangible loss), its value is gradually transferred to the product through depreciation, which constitutes a part of the product cost. This part of the value is converted into monetary form with the realization of product sales to form a depreciation fund.

Generally, the average life method (depreciation method) is used to calculate the depreciation expense of fixed assets. That is, the amount of depreciation expense of fixed assets should be calculated and apportioned according to the planned service life or month. The calculation formula is as follows:

In order to simplify the procedures, large and medium-sized enterprises determine a comprehensive depreciation rate according to various types of fixed assets. The annual comprehensive depreciation rate refers to the ratio of the sum of depreciation of fixed assets to the sum of the original value of fixed assets, indicating the degree of loss of fixed assets, and its calculation formula is as follows:

Monthly depreciation rate of fixed assets = annual depreciation rate of fixed assets ÷ 12 In forest mining and transportation industrial enterprises, due to the obvious seasonality of production and heavy handling workload, for some fixed assets, such as those used in bulk transportation operations, the depreciation expense can also be calculated by the output depreciation method and the mileage depreciation method. ① Output depreciation method: that is, the method of calculating and extracting the depreciation of fixed assets according to the planned total output within the service life. The calculation formula is as follows:

② Mileage depreciation method: that is, the method of calculating depreciation according to the mileage of vehicles and boats, and its calculation formula is as follows:

Depreciation fund is formed by calculating the depreciation expense of fixed assets, which not only makes up for the loss of fixed assets, but also provides a reliable source of funds for equipment renewal and transformation, which is conducive to the technological progress of enterprises.

See fixed assets of forest industry enterprises.