Replacement investment
Under replacement investment (including replacement , re-investment ) is in the business administration an investment in tangible assets to understand that the replacement of worn or dysfunctional assets used.
General
Fixed investments can be divided into foundation , expansion , rationalization or replacement investments according to their purpose . Of these investment purposes, the replacement investment, alongside the rationalization investment, is the most risk-free , because both do not change the size of the company and are more or less inevitable. In addition, they do not involve an increase in the capital commitment . If you invest in technically identical replacement goods, this does not entail any increase in capacity . In the strict sense, a replacement investment only exists if the quantitative and qualitative properties of an exchanged investment object remain unchanged compared to the previous one. However, if a company takes the failure of an investment property as an opportunity to purchase a replacement that is qualitatively and / or quantitatively better, an expansion investment is also made.
species
Replacement investments are usually incurred due to the sudden wear and tear of the systems in use. You can operationally to-use land , land rights , buildings , technical equipment and machinery , equipment or office furniture and equipment relate. Not depreciable fixed assets such as land subject although no wear, but their exchange for other reasons may be necessary ( removal of a deposit , contamination ). Their acquisition causes acquisition costs , which flow into the asset accounting as investment costs . These investment costs are offset by income from the sale or scrapping of the retired investment objects.
reasons
Replacement investments are necessary in order to guarantee a smooth production process and to avoid operational disruptions or even business interruptions that could occur due to technically defective systems. The approaching end of use of a system due to an advanced service life on which the replacement investment is based can be technical or economic:
- technical reasons : the investment object is no longer physically usable (e.g. engine damage ),
- Economic reasons : although technical usability is still given, it is no longer justifiable for economic reasons (e.g. increasing rejects , increased susceptibility to repairs ).
Effects
Important equipment whose failure to significant disruptions could lead, are in companies as part of the redundancy in storage to be used by immediate installation to (z. B. engines for airlines ). In this way, long delivery times that hinder production from suppliers can be avoided. The replacement investment leads to acquisition costs that burden the profit and loss account and in the balance sheet to a balance sheet extension because the new investment object is capitalized with its acquisition costs, the old one with its lower residual value . If an identical machine with improved technology is purchased as a replacement, the capacity remains constant and the production costs per piece decrease (shorter throughput times , lower material and energy consumption). A replacement investment can therefore also be a rationalization investment, and expansion investments can also have rationalization effects.
See also
Individual evidence
- ↑ Wolfgang Hoffmeister, Investment calculation and utility value analysis , 2008, p. 20
- ↑ Wolfgang Hoffmeister, Investment calculation and utility analysis , 2008, p. 19
- ↑ Armin Töpfer, Business Administration: Application and Process Oriented Basics , 2005, p. 979