Substantiation of the Approach to Selecting the Depreciation Method for Property, Plant, and Equipment

Abstract

The purpose of the article is to substantiate the approach to selecting the depreciation method in oil and gas companies. To achieve this purpose, the following research methods were used: observation, comparison, integrated study of business transactions – to collect factual information on the use of depreciation methods in oil and gas companies; abstraction, analysis – to substantiate the approach to selecting the depreciation method for property, plant, and equipment; graphical method – for the visual presentation of research material. The scientific novelty of the study is that the authors have substantiated the approach to selecting the depreciation method for property, plant, and equipment in oil and gas companies. In order to optimally select the depreciation method the authors have proposed to develop a testing system with the help of the automated accounting system. It will test property, plant, and equipment within different groups, in particular in terms of the anticipated revenues, nature of assets use, etc. This will help to improve the qualitative characteristics of financial statements in terms of the reliability of information about property, plant, and equipment. Keywords—property, plant, and equipment, depreciation methods, financial statements, oil and gas companies.