Depreciation charges are one of the most important accounting processes in the company. Due to depreciation, the value of the acquisition of fixed assets and intangible (intangible) assets is extinguished. In addition, depreciation is included in the item of expenses and is able to reduce the tax base. Therefore, depreciation, one way or another, accrue to all firms, regardless of the tax system that they use. In this article, we will consider the definition of this concept, the transaction for its transfer, depreciation transfer options, the difference in deductions in accounting and taxes, the transfer of the reduction balance to the option, the advantages and disadvantages of this option, and the example of depreciation calculation using the reduced balance method.
The definition of depreciation and the meaning of its transfer
Depreciation is the process of monthly allocation of the amounts of acquisitions of fixed assets and non-material assets to accounts 02 and 05. To put it in the simplest terms, its meaning is that the purchase price of the above assets cannot be extinguished at the same time, since these amounts are related to the costs of core activities firms. All such amounts should ultimately be included in the price of the finished product. Since fixed assets and non-material assets are expensive things, a company cannot transfer the price of their purchase to the cost of goods, work or services immediately. The depreciation process allows you to pay off the cost of their purchase gradually.
In companies with a general taxation system, these deductions occur every month according to one of four transfer options. Under the simplified taxation system (special regime), the periods and the method of transferring depreciation are slightly different, but it is still there.
Depreciation Postings
Transaction transactions can have a different look, depending on the situation, and on where the asset is used.
DBT 08 Cdt 02 - for the facility used in the construction and reconstruction of the company.
DBT 20 Cdt 02 - for the facility used in the main production.
DBT 23 Cdt 02 - for the facility used in auxiliary production.
DBT 25 Cdt 02 - for a general production facility.
DBT 26 Cdt 02 - for a general business facility.
DBT 29 Cdt 02 - for the facility used in the service industry.
DBT 44 Cdt 02 - for the object used in trade.
DBT 79.1 Cdt 02 - for an object transferred from the main company to the branch or, conversely, from the branch to the main company.
DBT 83 Cdt 02 - increase in the object if its price has changed after revaluation.
DBT 91.2 Cdt 02 - for the facility that was leased.
DBT 97 Cdt 02 - for the object, if it is used in works, expenses for which are regarded as deferred expenses
Account 02 was used in these postings. But account 05 can also be used instead.
Depreciation methods for fixed assets and non-material assets
In accounting under the general taxation system, there are only four transfer options. Linearly, by the value of the sum of the numbers of years of the usable period, in proportion to the volume of the manufactured product and depreciation in the manner of a reduced balance. An example of the simplest enumeration option is linear, so this method is used more often than others. The company must choose one of the transfer methods and confirm this choice, fixing it in the accounting policy. In the future, the transfer will be made only for one selected option. The frequency of the transfer is strictly regulated and equals one month.
If, under the general taxation system, depreciation transfer periods are determined by applicable law, then under a special regime, the company can choose the time of transfer. The option, which is the answer to the question of how to calculate depreciation in a special mode, is very simple. The value of the price of the purchased object is divided into equal parts by three, two or one quarter. The whole value of the purchase is extinguished for the year. If the object was acquired in the first quarter (quarter) of the year, then the price is distributed over the next three quarters. If the purchase was made in the second quarter, then the next two. If the company acquired the asset at the end of the year, the entire amount of the acquisition can be repaid immediately. As can be seen from the above, there are no options and special formulas for calculating depreciation under the special regime.
Transfer depreciation in accounting and taxes
An important point. To find out the general value of the tax base, other depreciation methods for fixed assets and non-material assets are used. In this case, the company is given the opportunity to make a choice of only two options: linear deduction and non-linear. When choosing different transfer options in accounting and tax accounting, discrepancies may appear. The linear version of the transfer in tax accounting is identical to depreciation in a linear way in accounting.
When accounting is taken into account, depreciation is applied to any object with a purchase value of more than 40,000 rubles, and when accounting for taxes, it is necessary to use OKOF to determine depreciable items. This directory contains all types of objects that should be depreciated, and this list is updated periodically. These changes must be monitored to avoid various problems with the tax service.
In accounting, depreciation must continue to accrue, even if the property, for some reason, can not work. When tax accounting, if this happens, depreciation on the object is suspended.
Transfer of depreciation with a reduced balance option
In case of transfer by this method, special coefficients are used. In addition, the calculation must be carried out from the residual value of the purchase of the object. Otherwise, the calculation of the reduced balance option is identical to the linear depreciation calculation. The company can choose odds - one, two or three. Below is the formula for calculating the depreciation transfer as a variant of the reduced balance and the procedure for calculating it.
- Depreciation rate = (1 / useful life) * 100% * increasing factor.
- Depreciation = initial price * depreciation rate. That is, the amount of depreciation for the first month of using the property is obtained.
- Residual price. The initial price is depreciation.
- Depreciation = residual price * depreciation rate (you get the value for the second and next months).
Advantages and disadvantages of transferring depreciation to a reduced balance option
Note. Before you consider the example of depreciation accrual using the reduced balance method, we will highlight the advantages and disadvantages of this technique. What does it mean? The variant of the reduced balance due to the non-uniformity of the values that it gives in the calculations is the fastest option to quench the price of an object. But, the minus is that it can not be used for some categories of items. These include:
- passenger cars, with the exception of vehicles for official purposes;
- interior items;
- objects with a period of use of less than 3 years;
- special objects created for the manufacture of special products.
An example of depreciation using the reduced balance method
The company acquired an item of property for 180,000 rubles. The period of valid use is 5 years. The company chose a value of 2 as a coefficient for depreciation deduction.
- Depreciation rate = (1/60) * 100% * 2 = 3.34%.
- Depreciation = 180,000 * 3.34% = 6012 rubles. in the 1st month of transfer.
- Residual value = 180 000 - 6012 = 173 988 rubles.
- Depreciation = 173,988 * 3.34% = 5,811.20 rubles. in the 2nd and following months.