1. Overview of depreciation
Depreciation: refers to the systematic allocation of the accrued depreciation amount according to the determined method during the useful life of the fixed asset.
1) Reflects the value of fixed assets that are gradually depleted due to use.
2) In line with the "matching principle", it is matched with the economic benefits generated by the fixed assets during the use period.
2. Factors affecting the depreciation of fixed assets
1) The original price of fixed assets refers to the cost of fixed assets.
2) The useful life of fixed assets (to consider the expected production capacity or physical output, tangible wear and tear, such as equipment.
Wear and tear in use, natural erosion of buildings and intangible wear and tear, such as the emergence of new technologies, laws and other regulations).
3) Estimated net residual value (the amount obtained from the disposal after deducting the estimated disposal costs).
4) Provision for impairment of fixed assets (the cumulative amount of provision for impairment of fixed assets).
3. Scope of depreciation of fixed assets
Enterprises should respond in addition to the following casesAllProvision for depreciation of fixed assets:
SufficientDepreciationContinue to use itfixed assets.
2) According to the regulationsPriced separatelyAsFixed assetsCredited land.
Depreciation of fixed assets starts and stopsTime
1) The enterprise shall withdraw depreciation on a monthly basis, and the fixed assets increased in the current month shall not be depreciated in the current month, and the depreciation shall be calculated from the next month; The depreciation of fixed assets reduced in the current month shall be provided for in the current month, and the depreciation shall not be provided from the next month.
For example, if it is acquired on January 31 and depreciation begins in February, it will be depreciated for a total of 11 months in the year. It was sold on December 31 and depreciated in December, with a total of 12 months of depreciation that year.
2) After the depreciation of fixed assets is fully depreciated, depreciation will not be withdrawn; Depreciation will not be made for fixed assets that are scrapped in advance.
3) For fixed assets that have reached the intended state of use but have not yet completed the final accounts, the cost shall be determined according to the estimated value and depreciation shall be accrued; After the final accounts are completed, the original provisional value will be adjusted according to the actual cost (retrospective adjustment), but there is no need to adjust the depreciation amount that has been accrued (future applicable method, change in accounting estimates).
4) Fixed assets that are out of use in the process of modernization and transformation shall be transferred to the book value of the construction in progress and no depreciation shall be provided. After the renovation project reaches the intended usable state and is converted into a fixed asset, depreciation shall be accrued according to the redetermined depreciation method and the remaining useful life of the fixed asset (called the period of reconstruction and expansion or the period of renovation, the repair expenditure incurred reaches more than 20% of the original value of the fixed asset, or the economic service life of the relevant asset is extended by more than two years after repair, or the fixed asset after repair is used for new or different purposes). ）
5) Fixed assets shall be depreciated during the period of regular overhaul (no need to transfer to the construction in progress).
Fourth, the start and end time of depreciation
Depreciation will begin to accrue depreciation for fixed assets newly added in the current month (reaching the intended usable state) in the next month; The depreciation of fixed assets reduced in the current month shall be provided for in the current month.
The new intangible assets in the current month shall be amortized in the current month; The intangible assets that are reduced in the current month will not be amortized in the current month.
After the depreciation of fixed assets is fully raised, no depreciation will be accrued regardless of whether they can continue to be used, and depreciation will not be made up for fixed assets that are scrapped in advance.
For fixed assets that have reached the intended state of use but have not yet completed the final accounts, the cost shall be determined according to the estimated value and depreciation shall be provided; After the final accounts are completed, the original provisional value will be adjusted according to the actual cost, but the depreciation amount that has been accrued is not adjusted.
5. Depreciation method of fixed assets
Enterprises should reasonably choose the depreciation method according to the expected consumption mode of the economic benefits related to fixed assets. Once the depreciation method of fixed assets is determined, it cannot be changed at will (it is a change in accounting estimate, and the method will be applied in the future, and no retrospective adjustment is required).
An enterprise's income may be affected by inputs, production processes, sales and other factors, which are not related to the expected consumption pattern of the economic benefits associated with fixed assets, and therefore, depreciation should not be based on income generated by economic activities, including the use of fixed assets.
Averaging of years:The accrued depreciation amount of the fixed assetBalancedA method of apportionment to the expected useful life of a fixed asset. The amount of depreciation is the same for each periodEqual
Limitations: Fixed assets are not provided in different yearsEconomic benefitsis different (more in the early stage, less in the later stage); Every year is not consideredRepair costswill increase the problem. If the fixed assets are of each periodThe degree of load is differentThe average method of life does not reflect the actual usage, and the depreciation amount is not consistent with the degree of wear and tear of fixed assets.
Workload Method:According toActual workloadA method of calculating the amount of depreciation payable for each period.
LimitationsThe workload approach assumes that the decrease in the value of fixed assets is not due to the passage of time, but due touse。ForTangible wearThis assumption is reasonable in cases where economic depreciation is more important than economic depreciation. ButIntangible attritionFixed assets will be depreciated even if they are not used, and they cannot be reflected in the books using the workload method.
Double declining balance method: The projected net residual value is not consideredbased on the original price of the fixed assets at the beginning of each period minus the amount of accumulated depreciation (That is, the net fixed assetsandDoubleThe straight-line depreciation rate is a method of calculating the depreciation of fixed assets.
Sum of years method:Fixed assetsOriginal priceMinusEstimated net residual valuemultiply the balance by one to the remaining useful life of fixed assets as the numeratorThe sum of the year-over-year figures for the estimated service lifeThe annual depreciation amount is calculated for the decreasing fraction of the denominator.
6. Accounting treatment of depreciation of fixed assets (who benefits and who bears).
Borrow:Manufacturing expenses (depreciation on the production floor).
Administrative expenses (depreciation of unused fixed assets).
Sales expenses (depreciation accrued by the company's dedicated sales department).
Other operating costs (depreciation of fixed assets leased by the enterprise).
R&D expenditure (depreciation is provided with fixed capital when an enterprise develops intangible assets).
Construction in progress (depreciation of fixed assets is used in construction in progress).
Credit:Accumulated depreciation.
7. Review of the service life and depreciation method of fixed assets
At the very least, businesses should be:Every year, every yearEventually, on fixed assetsService lifeEstimated net residual valueandDepreciation methodConduct a review.
If there is a discrepancy between the estimated service life and the original estimate, it shallAdjust the useful life of fixed assets。If there is a difference between the projected net residual value and the original estimate, it shallAdjust the estimated net residual value。Economic benefits related to fixed assetsExpected consumption patternsIf there is a major change, the depreciation method of fixed assets should be changed.
Note: Changes in the useful life of fixed assets, estimated net residual value and depreciation methods should be taken as follows:Changes in accounting estimates (future application, no retrospective adjustments required).