The accumulated depreciation of fixed assets refers to the amount of loss and loss of the asset in the process of use calculated by the enterprise according to a certain method during the service life of the fixed asset, and included it in the current cost or expense. The following details how to account for the accumulated depreciation of fixed assets:
1. Determine the depreciation period and depreciation rate of fixed assets
1.Determine the service life of fixed assets: evaluate and record the service life of each fixed asset according to the production and operation of the enterprise and the characteristics of the industry. Typically, companies use the averaging method to estimate the useful life of fixed assets
2.Determine the proportion of residual value of fixed assets: Residual value is a part of the residual value of fixed assets, generally accounting for about 10%-30% of the entire asset. The determination of the residual value can be based on factors such as the original price and expected service life of the fixed assets
3.Choose the appropriate depreciation method and method: There are two types of depreciation methods: straight-line method and accelerated depreciation method. The straight-line method is a method of apportioning the depreciation amount of a fixed asset to each period from year to year as a fixed percentage of its original value;The accelerated depreciation rule is a method of decreasing the depreciation amount of fixed assets at a relatively rapid rate from year to year. The choice of depreciation method depends on the specific circumstances and financial objectives of the business;
2. Calculate the initial cost of fixed assets and the amount of depreciation during the service period
1.Initial cost: The purchase of fixed assets** is the initial cost of fixed assets after deducting the relevant taxes and miscellaneous charges that have been fully withdrawn
2.Depreciation amount = (original price of fixed assets - initial cost) depreciation rate Number of depreciation periods.
The depreciation rate is the percentage of depreciation of the fixed asset each year, and the depreciation period is the reciprocal of the useful life of the fixed asset. For example, if the original value of a fixed asset is 1 million yuan and the service life is 10 years, the annual depreciation rate is 10%, then the depreciation amount of the fixed asset is:
Depreciation amount = (1 million - 100,000) * 10% = 900,000 yuan.
3. The depreciation amount will be credited to the relevant account
1.The result of the calculation of the depreciation amount is credited to the Manufacturing Expenses account;
2.If the fixed asset is an intangible asset, set up the appropriate active account under the Administrative Expenses account and transfer the depreciation amount from the Manufacturing Expenses account to the Administrative Expenses
3.In the Accumulated Depreciation account, add the depreciation amounts from the above two steps to get the final total depreciation;
4.The difference between the total depreciation amount and the original value of the fixed asset is recorded as a net decrease in the fixed asset and recorded in the Fixed Assets - Accumulated Depreciation account. At the same time, the original value of the fixed asset is deducted from the Fixed Assets - Original Value account to reflect its net reduction;
4. Prepare financial statements and make relevant adjustments
1.When preparing the balance sheet, the accumulated depreciation of fixed assets needs to be deducted from the "fixed assets" item to reflect their actual value status;
2.For the amortization of intangible assets, the accumulated depreciation amount also needs to be deducted from the "intangible assets" item in order to correctly reflect the degree of wear and tear of the intangible capital;
3.When preparing the income statement, the depreciation amount should be deducted from the items such as "operating income" and "operating cost" to reflect the real income of the enterprise's operating activities