Account 02 02 was created to collect information about the amount of accumulated deductions for depreciation of fixed assets. This is one of those elements of accounting that no enterprise can do without, regardless of the direction of activity and level of development. It is thanks to the monthly deductions to account 02 that the organization can reduce the initial cost of fixed assets upon its liquidation.
Depreciation concept
To understand the purpose of the account and use it correctly, you must have an idea of the nature of depreciation and its importance in the finances of the organization. This concept is usually characterized as depreciation of property in monetary terms.
The calculated amount is accumulated in the account during the term of the planned operation of the facility. As a result, fixed assets can be written off, and the company has some capital to make a purchase.
Calculation Methods
The choice of a certain method of calculating depreciation charges cannot be made solely on the basis of personal preferences. The accountant acts in accordance with the job description and calculates the amount in accordance with the requirements of the accounting policy of the enterprise.
There are 4 methods for determining depreciation:
- reduced balance;
- cumulative;
- industrial;
- linear.
The first two methods allow you to write off the largest amount in the first years of operation, while the OS objects bring good profit. The company, as it were, “hedges” itself in case of a negative financial result. The production method involves the deduction of 02 02 amounts to the account in proportion to the volume of manufactured products. It is used only for those types of property that are involved in the production process. The method is convenient for its flexibility, depending on the level of income of the enterprise.
Linear method
All three depreciation methods discussed above involve the payment of amounts in different installments. Each month or year, the amount of deductions to the account 02 02 will vary depending on the originally specified conditions. The linear method involves the accumulation of amounts of OS depreciation in equal parts over the entire life cycle.
The method is convenient for the non-production sector and those facilities whose share in the total profit is expected to remain unchanged regardless of the year of use.
Depreciation Accounting
To reflect information on the total values of depreciation of property of the enterprise, the standard chart of accounts provides for account 02 02. The accounting rules within it are the same for all organizations. The reader already knows from the concept of depreciation that these are the amounts that serve as a source for acquiring new fixed assets after the completion of the operation of the property in question. Based on this, account 02 “Depreciation of fixed assets” is passive. The charge will be credited, and debited.
Analytical accounting can be made for certain types of property. The names of sub-accounts, as a rule, correspond to types of 01 accounts, because they directly interact with them.
At the end of the month, a credit balance is formed on the account, the value of which is reflected in the financial statements. There is no separate column for data on the balances of depreciation amounts in the balance sheet. But when calculating line 120 “Fixed assets”, the credit balance of account 02 is subtracted from the debit balance of account 01.
Debit Correspondence
Debit 02 of the account is mainly used when writing off fixed assets from the balance sheet of the enterprise. In addition to disposal, objects can be transferred to a subsidiary, branch or branch, which also determines the use of postings with debit account 02.
To write off the property, use the account assignment: Dt 02 Kt 01. If sub-accounts have been used, indicate the corresponding ciphers. The essence of the operation is to reduce the initial cost of the object, which the organization paid at the time of its acquisition.
If, after a planned revaluation of fixed assets, the property has depreciated by any amount, it becomes necessary to reduce depreciation charges proportionally to it. To record the operation, account 83 is used: Dt 02 Kt 83. The transfer of property to the unit is also recorded in the accounting data. Simultaneously with the posting of disposal of the OS record: Dt 02 Ct 79.
Loan postings
After acquiring fixed assets, depreciation is charged. 02 account acquires credit turnover. But according to the principle of double recording, at the same time with this process, an equal debit turnover also arises. What accounts are involved in the relationship? Most often, collective synthetic, containing information on the value of overhead costs and distribution costs.
For the production sector, this is primarily the accounts of cost accounting for manufacturing products: 20, 23, 25, 26, 29. Credit account 02 in correspondence with the account. 44 may indicate the acquisition by the enterprise of property used in the implementation process. Merchants can also use 44 accounts to record depreciation expense.
If the property was acquired and used in the current period, and the costs of the work will be taken into account in future periods, account 97 is used for calculating depreciation: Dt 97 Kt 02.
Account 02: typical postings
Having understood the principle of making entries in the depreciation account, you can begin to consider the main account assignments that can be made at the enterprise:
- Dt "Depreciation" Kt "OS" - the amount of depreciation on the object of the retired OS has been written off.
- Dt "Depreciation" Kt "Profitable investments" - the amount of depreciation of property intended for renting has been written off.
- Dt "Depreciation" CT "Settlements on-farm" - depreciation was carried out on the fixed asset transferred to the branch of the enterprise.
- Dt "Depreciation" Kt "Additional paid-in capital" - as a result of revaluation of fixed assets, the depreciation amount was reduced.
- Dt "Main production" KT "Depreciation" - depreciation was calculated on the facilities used in the main production.
- Dt "Auxiliary production" CT "Depreciation" - depreciation on the acquired equipment was accrued in the auxiliary production workshop.
- Dt "General expenses" Kt "Depreciation" - depreciation was calculated on the computers of administrative employees.
- Dt "General production costs" KT "Depreciation" - depreciation on property overhead for all purposes.
- Dt "Costs to sell" CT "Amortization" - the trading company reflected the amount of depreciation of property.
- Dt "Settlements on-farm" Kt "Depreciation" - depreciation of the registered assets received from the head department, accepted for accounting.
- Dt "Additional paid-in capital" Kt "Depreciation" - the amount of depreciation has been increased due to the increased price of fixed assets according to revaluation data.
- Dt "Other expenses" Kt "Depreciation" - depreciation was accrued on fixed assets leased.
As you can see from the example, to make postings for depreciation is not difficult even for a novice accountant. The main thing is not to forget about accounting policies and strictly adhere to the recommendations on calculating the amounts themselves, with the use of which correspondence will be compiled.