Depreciation is a long process of transferring the initial cost of worn - out means of labor (i.e., basic) to a product that has been produced with their help. The term itself came from the Latin word "amortisatio", which translates as "repayment". There is also accelerated depreciation. This is a deduction process that occurs at higher rates than average or current.
Depreciation charges are a tool for compensating depreciation and the gradual deterioration of fixed assets. They exist in the form of monetary funds, which are subsequently used for construction or repair, as well as the manufacture of new means of labor. They are made according to strictly defined norms regarding the value of the fixed asset . Deductions are usually included in the costs of circulation or production. In order to find the depreciation period, it is necessary to divide the service station into its rate.
What is the depreciation rate?
This is a predetermined percentage of the annual reimbursement of the initial price of a worn or lost part of the means of labor.
Depreciation in accounting
To date, there are four methods of calculating depreciation for accounting:
1. The first method is called the method of reduced residue. For each period, the total depreciation is equal to the residual value multiplied by a strictly defined percentage. Depreciation is accrued annually on the residual value at the beginning of the year.
2. The linear method by which depreciation is calculated. This is a uniform depreciation from the initial to the residual price. It is carried out during the entire period of use of the means of labor. The current residual value (the one that currently exists) can be determined by subtracting the accumulated total depreciation of the fixed asset from the original cost.
3. The method of writing off initial cost in proportion to the amount of work done (or manufactured products). In this case, the process takes place on the basis of a certain natural indicator (for example, the hour of using the equipment - machine tool or machine).
4. The method of gradual write-off of value, oriented by the sum of the useful life.
Depreciation in tax accounting
How is depreciation carried out in tax accounting? This is a process that is quite formal in nature for the reason that it describes, rather, not real depreciation, but the legislatively established restrictions on depreciation. They allow you to reduce the income tax base. In tax accounting, there are two ways to deduce depreciation funds: linear and non-linear. The company itself must choose the method of deduction of depreciation funds. In this case, a prerequisite is the use of the selected method to any group of objects during the entire period of useful use.
According to the current Russian tax legislation, the property of the company is divided into non-depreciable and depreciable. Moreover, the latter is that property of an enterprise or organization, which is presented in the form of the results of intellectual work and is used to generate income. Its difference from non-depreciable property is that its value is repaid by accruing depreciation. Property is recognized as depreciable if its service life is more than twelve months, and the initial cost is more than forty thousand rubles.
The management of any enterprise needs to know what depreciation is. This will allow you to correctly calculate the income of your company and not remain in the red if the equipment has worn out or failed.