Depreciation of fixed assets is an important part of financial management, which is related to the cost, profit and asset value of an enterprise. Correctly understanding and applying the depreciation method will help enterprises reasonably amortize the cost of fixed assets and improve the quality of accounting information. This article will introduce several common fixed asset depreciation methods and their formulas to help you better understand and apply.
1. Average age method (also known as straight-line method).
The average life method is one of the simplest and most prevalent methods of depreciation. It assumes that depreciation is carried out at a steady, uniform rate, regardless of the utilization and efficiency of fixed assets in each accounting period. The formula is as follows:
Annual depreciation rate = (1 estimated useful life) 100%.
Monthly depreciation rate = annual depreciation rate 12
Monthly depreciation amount = original value of fixed assets Monthly depreciation rate.
2. Accelerated depreciation method (including double declining balance method and sum of years method, etc.).
The accelerated depreciation method is a method in which depreciation is withdrawn at a relatively fast rate at the beginning of the use of fixed assets, and then gradually reduced in the medium term. This method can objectively reflect the actual production value of fixed assets in each period.
Double declining balance method: Last depreciated value of fixed assets = net fixed asset value (2 estimated useful life).
Sum of years method: Net fixed assets at the beginning of each year (estimated useful life - useful life) Estimated useful life.
3. Categorical depreciation rate.
Different depreciation rates are set according to different fixed asset categories. This method takes into account the characteristics of fixed assets of different nature and different use conditions, and amortizes the cost more reasonably.
In addition to the above three main depreciation methods, there are also various methods such as the accelerated straight line method and the decreasing accumulation method. When choosing a depreciation method, an enterprise should consider it comprehensively in light of the actual situation of the enterprise, the characteristics of the industry and the requirements of the tax law. At the same time, enterprises should also regularly evaluate fixed assets, adjust the depreciation amount according to the evaluation results, and ensure the accuracy of accounting information.
In conclusion, the correct understanding and application of the depreciation method of fixed assets is essential for the financial management of enterprises. Through the rational selection and use of depreciation methods, enterprises can better amortize the cost of fixed assets, improve the quality of accounting information, and provide strong support for decision-making.