When it comes to asset depreciation, businesses need to carefully consider different calculation methods in order to accurately record and allocate the value of assets. Here are four common depreciation calculation methods, each with its applicable circumstances and advantages and disadvantages.
1.Term averaging method (straight-line method).
This is one of the most common depreciation calculations. It is suitable for those assets that are expected to have a relatively stable useful life and a uniform rate of depreciation. The specific calculation steps are as follows:
Depreciation amount per period = original value of fixed assets Estimated useful life
For example, a company purchased a production equipment that does not need to be installed, with a value of 3 million yuan and an estimated service life of 5 years. Then the annual depreciation accrued is: 300 5 = 600,000 yuan.
2.Workload method
The workload method calculates depreciation based on actual workload and is applicable to assets that are used unevenly. The specific calculation steps are as follows:
Depreciation per unit of work = Original value of fixed assets 1 - Net residual value rate) Estimated total effort
For example, the original price of a cargo truck is 600,000 yuan, the total mileage is expected to be 500,000 kilometers, and the net residual value rate is 5%. If you drove 0. in September 202140,000 km, depreciation per unit mile is 114 yuan km, then the depreciation amount for the month is: 04 × 1.14 = $4,560.
3.Double declining balance method
This is an accelerated depreciation method that does not take into account the residual value of fixed assets. The specific calculation steps are as follows:
Calculate the double declining balance depreciation rate:2 100% of the estimated useful life
Annual depreciation amount = net book value of fixed assets at the beginning of the period Double straight-line depreciation rate
Monthly depreciation = Annual depreciation 12
In the last two years, it would be necessary to change to a straight-line approach, amortizing the net net book value of fixed assets at the beginning of the penultimate year after deducting the estimated net residual value over two years.
4.Sum of years method
It is also an accelerated depreciation method. The specific calculation steps are as follows:
Annual depreciation amount = (original value of fixed assets - net residual value) annual depreciation rate
For example, the original value of a fixed asset of a company is 100,000 yuan, the estimated net residual value is 10,000 yuan, and the expected service life is 5 years. Depreciation is calculated based on the sum of years method, and the sum of years is 15. The depreciation amount in the first year is 30,000 yuan, and the depreciation amount in the second year is 240,000 yuan, and so on.
Please note that the specific depreciation calculation should be carried out according to the actual situation and accounting policies of the company.
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