In the process of economic activity, fixed assets (hereinafter OS) of the company are subject to wear and tear. Intangible assets (hereinafter referred to as intangible assets), although they do not have the properties of physical wear and tear, can depreciate. All OSs and / or intangible assets that society has over time lose their original price. In order to extinguish the lost price, the OS of the company calculates depreciation. Below we will give a definition of this concept, its meaning, periods and subtleties of transfers in two types of accounting - tax (hereinafter NSU) and accounting (hereinafter BU), and formulas explaining the question of how to calculate depreciation.
Depreciation Description
Depreciation - periodic transfers (write-offs) of certain monetary values (amounts), accounted for as cash expenses, which after a certain period of time should become equal to the purchase value (the sum of the initial price) of a particular fixed asset or intangible asset.
Depreciation Accounts
In the chart of accounts BU there are two depreciation accounts - 02 and 05.
After the company purchases fixed assets or intangible assets, payments by suppliers and the state for taxes, the value of the costs for this object is credited to account 08 (capital investments or investments in non-current assets). Further, depending on the depreciation formula used, the accountant periodically transfers monetary values to account 02 (depreciation of fixed assets) or to account 05 (depreciation of intangible assets) recognized as expenses of funds. These expenses are included in expenses for the main (main) type of activity for their further redemption.
Meaning of depreciation
Various consumables purchased by the company for the main activity, give their price immediately, since it is included in the expenses for the main activity immediately.
If the company bought an operating system or intangible asset, the accountant cannot calculate the value of their purchase immediately, as this is not advisable for the following reason. Due to the fact that cash costs associated with fixed assets or intangible assets should be attributed to the cost of the finished product by the main type of activity, a one-time deduction will cause the necessary excessive increase in price. Therefore, such deductions should be carried out in parts.
Many operating systems and intangible assets are also subject to another type of depreciation - moral. Such wear and tear occurs in any situation, even if the OS or NMA is not used at all. Depreciation is the aging of an operating system or intangible asset against the backdrop of new developments, improvements in production technology and the release of new OS models. Depreciation should also relate to expenses, in which case depreciation should also be carried out.
What property of the company is recognized as property for depreciation?
Depreciation is given to fixed assets or intangible assets if:
- if the company has exclusive ownership of this object
- if it is used by the company to obtain an economic advantage (income)
- if the object has a period of intended or well-defined useful life (hereinafter referred to as STI) above 12 months
- if the object was purchased for more than 40,000 rubles
Depreciation Terms
All companies except those that keep records on the simplified tax system, must give depreciation every month. The company has the right to choose the formula for transferring depreciation, which is fixed in the accounting policy.
Firms operating under the simplified tax system may determine the periods for the return on depreciation of fixed assets at their discretion, but it should be listed at least once a year. When returning depreciation on intangible assets, firms operating on a simplified system have a different principle. With regard to intangible assets, such firms are allowed to write off the values of expenses for the purchase of intangible assets at a time when this object is included in the accounting. The periods and formula for transferring depreciation should also be fixed in the accounting policy of the company.
Depreciation begins to be given on the subject of property of the company in the next month after the month of its inclusion in the company's accounting.
Depreciation in the accounting department and the NSU under the general taxation system (DOS)
The purpose of the NSU, conducted at a company with DOS, is to establish the amount of income tax. Due to the fact that the company's profit is revenue minus cash expenses, depreciation in this case is of great importance, since it is taken into account as a waste of funds. The formulas and the depreciation return system in the BU and the NSU are different in determining the tax base (tax amount).
Depreciation charges are calculated on the basis of the STI of a particular fixed asset or intangible asset. JFS refers to the period during which a particular OS or NMA is capable of providing money for society. When maintaining a management system, the technical information system is determined by the company independently, based on the technical characteristics of the facility or on the expected service period (if it is impossible to determine it by the first method). For NGU SPI is determined according to specific regulations - the All-Russian Classifier of Fixed Assets (OKOF).
At NSU, the concept of “fixed assets” is used instead of the concept of “fixed assets” in a business unit. Fixed assets and fixed assets of the company are one and the same.
In the BU, as already mentioned above, any property with an original price of more than 40,000 rubles becomes a property for depreciation. When determining property for depreciation at NSU, they are guided by the OKOF directory.
If depreciation in the accounting department is given separately for each operating system or intangible asset when it is included in the accounting, then depreciation is paid at the Novosibirsk State University immediately for all fixed assets or intangible assets.
Depreciation deductions at the enterprise in the accounting unit occur regardless of whether the fixed assets or intangible assets are used in economic activities. At NSU, on the contrary, depreciation is suspended in the event that an object under depreciation for some reason has suspended its participation in the business of the company. In this case, the depreciation value given earlier (if the fact of depreciation took place) should be credited back to the cash income of the company.
There are four formulas for the depreciation return in a used unit: linear reception, reception of a reduced balance, acceptance of a transfer by the value of the number of years of the JI, transfer in proportion to the volume of goods released. There are only two depreciation transfer formulas at NSU: linear and non-linear. At the same time, in the linear reception of NSU the same formula is used when it is necessary to calculate depreciation, as in the linear reception of the control unit.
Depreciation in the BU and NSU at the simplified tax system
In the case of STS, there is also a difference in the process of depreciation return between NSU and BU. For small firms, leading NSU on the simplified tax system “income minus expenses”, the principle of transferring depreciation that differs from the common tax system works. Under the special regime (USN), small firms are allowed to make uniform depreciation on fixed assets or intangible assets for one year. Under this system, if the facility was commissioned in the first quarter of the reporting year, then the costs of its purchase in the form of depreciation are divided into all subsequent quarters of this year. If an object was put into operation in the last quarter of the reporting year, then expenses for its purchase are written off in the form of depreciation at a time. In the BU under the special regime, as already noted above, companies are allowed to choose depreciation return periods on their own.
Depreciation transfer formulas in accounting
- Linear. Uniform return on depreciation during the JFS. Depreciation Formulas for Linear Admission:
- Na = (1 / SPI) * 100%
- A = PS * Na
- Reception of the reduced balance. The return is from the price in the balance (residual value), and increasing factors are used (1, 2 or 3). Formulas for depreciation when taking a reduced balance:
- Na = (1 / SPI) * 100% * KP
- A = PS * Na - in the 1st month
- OS = PS - A
- A = OS * Na - in the 2nd and subsequent months
- Acceptance of returns by the sum of the numbers of years The calculation is carried out from the original price, which is multiplied by a fraction. The numerator of this fraction is the number of full years to the end of the JFS. In the denominator of the fraction is the value of the number of years of the SPI. With this technique, the depreciation value is gradually reduced every year. The formula for depreciation on the sum of the number of years of the IPI:
- Acceptance of returns is proportional to the volume of goods released. The depreciation rate for this technique is calculated as the ratio of the quantity of goods completed per month to the calculated or normative value of this indicator for the entire STI. With this technique, the depreciation value may vary from month to month. The formula for depreciation when returning depreciation is proportional to the volume of goods released:
Explanation of abbreviations in the formulas:
- Na - depreciation rate in percent
- A - monthly depreciation
- SPI - useful life in months
- PS - initial price (initial cost)
- KP - coefficient of increase
- OS - the price in the balance (residual value)
- KPL - the number of full years to the end of SPI
- SCLSPI - the sum of the number of years of the SPI
- FDA - the number of goods (products) completed per month
- PSPI - estimated or normative amount of goods (products) for the entire SPI
Depreciation Transfer Examples
Linear Reception
The company bought the OS at an initial price of 180,000 rubles. The SPI of this OS was determined to be 5 years (60 months).
Na = (1/60) * 100% = 1.67%
A = 180,000 * 1.67% = 3006 rubles
We remind you that any number with a percentage is a number divided by 100, that is, 1.67% in our case is 1.67 / 100. In the expanded form, the last action will look like this: 180,000 * (1.67 / 100 )
Acceptance of a reduced balance
The company bought the OS at an initial price of 180,000 rubles. The SPI of this OS was determined to be 5 years (60 months). The increasing coefficient for the return on depreciation was chosen equal to two.
Na = (1/60) * 100% * 2 = 3.34%
A = 180,000 * 3.34% = 6012 rubles in the first month of depreciation
OS = 180 000 - 6012 = 173 988 rubles
A = 173 988 * 3.34% = 5811.20 rubles (rounded up) in the second and subsequent months
Acceptance of returns by the sum of the numbers of years SPI
The company bought the OS at an initial price of 180,000 rubles. The SPI of this OS was determined to be 5 years.
A (annual) = 180,000 * (5/1 + 2 + 3 + 4 + 5) = 60,000 rubles for the first year
A (monthly) = 60,000 / 12 = 5,000 rubles monthly for the first year
A (annual) = 180,000 * (4/1 + 2 + 3 + 4 + 5) = 48,000 rubles for the second year
A (monthly) = 48,000 / 12 = 4,000 rubles monthly for the second year
Etc.
Acceptance of returns in proportion to the volume of goods released
The company bought the OS at an initial price of 180,000 rubles. The estimated volume of goods manufactured over 5 years is 150,000 units. 1800 units were manufactured per month.
A = 180 000 * (1800/150 000) = 2160 rubles