September 24, 2014, the State Council executive meeting to study and improve the policy of accelerated depreciation of fixed assets, the meeting determined that, firstly, for all industry enterprises after January 1, 2014, newly purchased for research and development of instruments and equipment, the unit value of not more than 1 million yuan, allowing a one-time charge to the current cost of deducting before tax; more than 1 million yuan, you can shorten the proportion of 60% of the Depreciable life, or take double declining balance and other methods to accelerate depreciation. Secondly, fixed assets with a unit value of not more than 5,000 yuan held by enterprises in all industries are allowed to be deducted before tax as a one-time charge to the current cost. Third, for fixed assets newly purchased after January 1, 2014 by enterprises in industries such as biological drug manufacturing, special equipment manufacturing, railroad, ship, aerospace and other transportation equipment manufacturing, computer, communication and other electronic equipment manufacturing, instrument and meter manufacturing, and information transmission, software and information technology services, they are allowed to shorten their depreciation life by 60% of the specified life, or to adopt methods of accelerated depreciation, such as double-declining balance and other accelerated depreciation methods. accelerated depreciation methods such as declining depreciation, to promote the expansion of imports of high-tech products.
The meeting information both fixed assets into the cost of a one-time expense, and accelerated depreciation or shorten the depreciation period, so it is necessary to look back at the evolution of China's enterprises in the past two decades of depreciation policy of fixed assets.
One of the principles of corporate accounting is that there should be a reasonable division of "revenue expenditure and capital expenditure" of the boundaries, where the benefits of expenditure only in the current year (or a business cycle), should be used as revenue expenditure; where the benefits of expenditure and several fiscal years (or several business cycles), should be used as capital expenditure. Expenditures of a capital nature.
Enterprises will be tangible assets according to the benefit period is divided into inventory (including low value consumables), fixed assets.
Inventories include all kinds of materials, commodities, products in process, semi-finished products, finished products, etc.
Low-value consumables refers to the shorter useful life, or lower value, not as fixed assets accounting for a variety of appliances items.
The so-called fixed assets are assets with a useful life and a beneficial period of more than one fiscal year (or one operating period).
Fixed Assets and Low-Value Consumables
Qualified fixed assets are expensed through depreciation over their estimated useful lives.
Low-value consumables, tangible assets with a unit value below a specified limit, can be amortized by one-time amortization, 50-50 amortization, or amortization in installments.
For smaller values, they can be costed and expensed once at the time of adoption.
The larger value can be amortized according to the period of durability.
The so-called 50-50 amortization is 50% at the time of adoption and another 50% at the time of retirement.
Before January 1, 2009, the purchase of low-value consumable input tax can be deducted, while the fixed asset standard input tax can not be deducted, so some enterprises have been artificially "fixed assets" into zero, in order to achieve the purpose of the certification of the deduction, the tax authorities in the tax inspections at that time, but also as one of the inspection adjustments. This is one of the contents of the inspection and adjustment.
Depreciation of fixed assets
The depreciation method is divided into straight-line depreciation and accelerated depreciation.
1, straight-line method of depreciation, including the average annual method and workload method.
(1) the average annual method, is in accordance with the estimated useful life, the average depreciation of fixed assets in this period. That is, the amount of depreciation charged each year is equal.
Annual depreciation rate=(1-estimated net salvage rate)/estimated useful life (years)*100%
Monthly depreciation=original cost of fixed assets*annual depreciation rate/12
(2)Workload method, which is based on the estimated total workload, according to the actual amount of work accomplished each year, in accordance with the depreciation to be provided each year. The Reply of the State Administration of Taxation on Issues Relating to Depreciation Methods of Fixed Assets (Guo Shui Han [2006] No. 452) makes it clear for the first time that, in accordance with the provisions of the Enterprise Accounting System and the relevant accounting standards, the workload method and the average annual method are the same as the straight-line depreciation method. As the workload may vary from year to year, the depreciation amount may be different from year to year.
Depreciation per unit of work = original cost of fixed assets * (1 - estimated net salvage rate) / estimated total workload
Monthly depreciation of a fixed asset = workload of the fixed asset in the month * depreciation per unit of work
2. Accelerated depreciation method includes the double declining balance method and the sum-of-the-years method.
(1) double declining balance method is to use the average annual depreciation rate twice as a fixed depreciation rate multiplied by the decreasing net value of fixed assets at the beginning of each year, the amount of depreciation due in each year of the method.
Annual depreciation rate=2/estimated useful life (years)*100%
Monthly depreciation=net fixed assets*annual depreciation rate/12
For the last two years, annual depreciation=(original value of the fixed assets-accumulated depreciation-salvage value)/2
(2)The gross annual law is the method of determining depreciation for fixed assets by multiplying the original value of the fixed assets, less the salvage value, by a declining yearly A method of calculating the depreciation of fixed assets by multiplying the net amount of the original value of the fixed asset less its salvage value by a decreasing fraction of a year.
Annual depreciation rate = remaining useful life / estimated useful life of the total number of years * 100%
Monthly depreciation = (original cost of fixed assets - estimated net salvage value) * annual depreciation rate / 12
In the case of fixed assets to determine the original value of fixed assets, the size of the depreciation amount of each year involves three factors, the estimated net salvage value, the estimated life, depreciation method.
The nature of accelerated depreciation from a case
[Case] Assume that a fixed asset has an original value of 800,000 yuan and a projected useful life of 10 years. The estimated net salvage value is 5%. What is the difference in the annual depreciation amount for different depreciation methods?
If depreciation is based on the average annual depreciation method, the annual depreciation is equal, both at $76,000, and the total depreciation over 10 years is $760,000.
If depreciation is provided in accordance with the double declining balance method, the annual depreciation is 160,000 yuan, 128,000 yuan, 102,400 yuan, 81,920 yuan, 65,536 yuan, 52,428.80 yuan, 41,943.04 yuan, 33,554.43 yuan, 47,108.87 yuan, 47,108.87 yuan, depreciation over 10 years totaled 76,000 dollars.
If depreciation is provided in accordance with the sum-of-the-years method, the annual depreciation will be $138181.82, $124363.64, $110545.45, $96727.27, $82909.09, $69090.91, $55,272.73, $41,454.55, and $27,636.36, respectively, 13818.18. depreciation over 10 years totaled $760,000.
If the depreciable life is shortened to 60%, i.e., 6 years, and then depreciated according to the average life method, it will be $126,666.67 for the first year to the sixth year, respectively, and the total depreciation for 6 years will be $760,000.
Calculation from this case can be seen, no matter which depreciation method, the enterprise in the estimated useful life of fixed assets, the total depreciation is the same, are 760000 yuan. So accelerated depreciation is the government's policy support for enterprises, so that the enterprise's depreciation in future years ahead of the depreciation, so that the enterprise to obtain part of the interest-free liquidity, accelerated depreciation can be accelerated related to the industry's fixed asset replacement. This can also understand why some enterprises to find ways to accelerate depreciation of fixed assets.
Of course, if a company is currently in a tax-advantaged period, accelerated depreciation is not good for the company.
Changes in the recognition of the original value of fixed assets
1. Fixed assets purchased are recorded at the agreed price or at a reasonable valuation, plus the value of packaging, transportation and installation costs paid.
Until December 31, 2008, input tax included in invoices for purchased movable fixed assets could not be deducted from output tax and had to be credited to the original value of fixed assets.
Since January 1, 2009, the input tax included in the VAT invoice for outward purchased movable fixed assets can be deducted from the output tax and is no longer included in the original value of fixed assets (However, the input tax of motorcycles, automobiles, and yachts subject to consumption tax for taxpayers' own use shall not be deducted from the output tax.) .
Since August 1, 2013, with the advancement of the "Camp Reform", the input tax of motorcycles, automobiles and yachts subject to consumption tax used by the taxpayers themselves can be deducted from the output tax.
So far, VAT invoices could not be obtained for purchased properties, and the original value of the properties was recognized according to the invoice amount and the relevant taxes and fees during the transaction.
2. Self-constructed fixed assets are recorded according to all expenditures actually incurred during the construction process
If the movable assets such as machinery and equipment are self-constructed, up to December 31, 2008, the input tax on purchased materials and the output tax on the deemed sale of self-constructed materials must be credited to the original value of the self-constructed fixed assets; starting from January 1, 2009, the input tax on purchased materials will no longer be credited to the original value of self-constructed fixed assets; and the input tax on purchased materials will no longer be credited to the original value of self-constructed fixed assets. From January 1, 2009, the input tax of purchased materials is no longer included in the original value of self-constructed fixed assets.
Till now, the cost of purchased materials used in self-constructed real estate must include the input tax value of the materials. If it has been certified for deduction, it must be made input tax transfer. If the materials produced by the user unit itself are used for the construction in progress, they must be treated as sales and the output tax must be credited to the construction in progress.
3. Fixed assets transferred from other units should be recorded according to the original book value of the investing unit; the value recognized by the assessment as the net value of fixed assets, such as the assessment of the net value of fixed assets recognized by the assessment is greater than the original book value of the investing unit, the assessment of the recognized figure as the original value of fixed assets.
4, fixed assets leased under finance, according to the lease agreement to determine the price of the equipment, transportation costs incurred, insurance costs en route, installation and commissioning costs and other expenditures recorded.
5, in the original fixed assets on the basis of alteration, expansion, according to the value of the original fixed assets, plus the expenditure incurred as a result of the alteration, expansion, minus the alteration, expansion of the process of realizing the income recorded.
6, the surplus fixed assets, according to the full replacement value of the accounts.
7, fixed assets donated, according to the invoice of the donated fixed assets, customs declarations, relevant agreements and similar fixed assets, such as domestic or international market prices and other information to determine the value of the accounts.
8, the enterprise with borrowed money to buy fixed assets, in the period of purchase and construction of the borrowing interest expenses, foreign currency translation differences, etc., should be included in the value of fixed assets.
Value criteria in the definition of fixed assets
Changes in accounting regulations:
In the "Enterprise Accounting System" (Caihui (2000) No. 25), "fixed assets, refers to the enterprise's use of more than one year of housing, buildings, machinery, machinery, transportation tools and other production, business-related equipment, apparatus, tools, etc. Items that are not part of the main equipment for production and operation, with a unit value of more than 2,000 yuan and a service life of more than 2 years, should also be treated as fixed assets."
In "Enterprise Accounting Standard No. 4 - Fixed Assets" (Caihui [2006] No. 3), it is stipulated that "Fixed assets are tangible assets that have the following characteristics at the same time: (1) Held for the purpose of production of goods, provision of labor services, leasing, or business management; and (2) Useful life of more than one fiscal year. Useful life means the expected period during which the enterprise will use the fixed asset, or the amount of products or labor services that the fixed asset can produce." It also stipulates that "a fixed asset can only be recognized if it simultaneously satisfies the following conditions:(1) it is probable that the economic benefits associated with the fixed asset will flow to the enterprise; and (2) the cost of the fixed asset can be measured reliably."
Provisions on Tax Policy
Article 30 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises (Decree of the State Council No. 85, 1991) stipulates that, "Fixed assets of an enterprise refer to the houses, buildings, machinery, machines, means of transportation, and other equipment or appliances related to production and operation, the service life of which is one year or more. production and operation-related equipment, apparatus and tools. Items that are not part of the main equipment for production or operation, with a unit value of less than two thousand dollars or with a service life of no more than two years, may be expensed according to the amount actually used."
Article 29 of the Rules for the Implementation of the Provisional Regulations on Enterprise Income Tax of the People's Republic of China (Cai Fa Zi [1994] No. 3) stipulates, "The fixed assets of a taxpayer refer to the houses, buildings, machinery, machines, means of transportation, as well as other equipment, apparatuses, tools and so on, which have a service life of more than one year, and which are related to the production and operation of the enterprise. Items that are not part of the main equipment for production or operation, with a unit value of more than 2,000 yuan and a period of use of more than two years, shall also be treated as fixed assets." Consistent with the accounting provisions.
The Rules for the Implementation of the Provisional Regulations on Value-added Tax of the People's Republic of China (Cai Fa Zi [1993] No. 38) defines "fixed assets" that are not subject to input tax deduction as follows: "(1) Machines, machinery, means of transportation and other equipment, tools, appliances and utensils related to production or operation, the service life of which exceeds one year, business-related equipment, tools and appliances; (2) items with a unit value of more than 2,000 yuan and a service life of more than two years that are not part of the main equipment for production and business."
Article 57 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China (State Council Decree No. 512) after the Unified Enterprise Income Tax Law for Domestic and Foreign Investments in 2008 stipulates that, "Fixed assets are non-monetary assets held by an enterprise for the purpose of production of products, provision of labor services, leasing, or business management, which have been in use for a period of more than twelve months, including houses, buildings, machines, machinery, means of transportation, and other equipment, appliances and tools related to production and business activities." Since then, the amount criterion for fixed assets has been removed from the tax law, only the period of use.
On the depreciation method of fixed assets
Changes in accounting regulations:
Accounting System for Foreign-Invested Enterprises (Caikai Zi [1992] No. 33):
"The straight-line method is generally adopted for the depreciation of fixed assets. Where it is not appropriate to use the straight-line method to calculate depreciation, the workload method may also be used."
Accounting System for Foreign Invested Enterprises (Caiji [1992] No. 33): "Accelerated calculation of depreciation should be limited to the use of double-declining-balance method or sum-of-the-years method".
The Enterprise Accounting System states, "The depreciation method of fixed assets can be adopted by the average annual limit method, workload method, sum-of-years method, and double-declining-balance method."
In Enterprise Accounting Standard No. 4 - Fixed Assets, it is stipulated that "Enterprises should reasonably select the depreciation methods for fixed assets based on the expected realization of economic benefits related to the fixed assets. The optional depreciation methods include the average annual limit method, workload method, double declining balance method and sum-of-the-years method."
Changes in Tax Law Provisions:
Article 34 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises (Decree No. 85 of the State Council, 1991) stipulates that, "The depreciation of fixed assets shall be calculated by the straight-line method; where other methods of depreciation need to be used, they can be applied by the enterprise, and after the local tax authorities for examination and approval, and then reported to the State Administration of Taxation for approval at each level."
Article 31 of the Rules for the Implementation of the Provisional Regulations on Enterprise Income Tax of the People's Republic of China (Cai Fa Zi [1994] No. 3) stipulates, "The depreciation method and depreciation life of fixed assets shall be carried out in accordance with the relevant provisions of the State". Generally in accordance with the depreciation life in business accounting.
Article 27 of the Notice on the Issuance of Measures for Deduction before Enterprise Income Tax (Guo Shui Fa [2000] No. 84) stipulates that the calculation of depreciation of fixed assets deductible by taxpayers shall be based on the straight-line depreciation method.
Article 59 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China (State Council Decree No. 512) after the unification of the enterprise income tax law for domestic and foreign capitals in 2008 stipulates that "depreciation of fixed assets calculated according to the straight-line method is allowed to be deducted".
On the Estimated Net Residual Value of Fixed Assets
The net residual value of fixed assets refers to that portion of the value of the residual fixed assets after the expiration of the useful life of the fixed assets minus the fixed assets cleaning costs payable. Net salvage value of fixed assets belongs to the non-transferable value of fixed assets, should not be included in the cost, expenses, in the calculation of depreciation of fixed assets, take the method of estimation, deducted from the original value of fixed assets, to the fixed assets scrapped directly recovered.
Changes in accounting regulations:
The Accounting System for Foreign-Invested Enterprises (Caihui Zi [1992] No. 33) stipulates that "the estimated salvage value should generally be not less than 10% of the original price".
The Accounting System for Enterprises stipulates that "an enterprise shall reasonably determine the estimated useful life and estimated net residual value of fixed assets in accordance with the nature of the fixed assets and the manner of consumption".
In Enterprise Accounting Standard No. 4 - Fixed Assets, it is stipulated that "an enterprise shall reasonably determine the expected useful life and the expected net residual value of fixed assets based on the nature of the fixed assets and the manner of consumption."
Changes in Tax Provisions:
Article 33 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises (State Council Decree No. 85, 1991) stipulates that, "The residual value of a fixed asset shall be estimated and subtracted from the original price of the fixed asset before calculating depreciation. The residual value should be not less than ten percent of the original price; the need to leave less or no residual value, subject to the approval of the local tax authorities."
From January 1, 1994 implementation of the "Chinese People's **** and the State Provisional Regulations for the Implementation of Enterprise Income Tax Rules" (Cai Fa Zi [1994] No. 3), Article 31 provides: "fixed assets in the calculation of depreciation, should be estimated salvage value, subtracted from the original price of the fixed assets, the salvage value of the proportion of the original price of 5% or less, the enterprise to determine their own; due to the Special circumstances, the need to adjust the residual value of the proportion, should be reported to the competent tax authorities for the record. According to this provision, except for foreign-invested enterprises, the net residual value of fixed assets retained by other enterprises is less than 5%, which is generally required to be adjusted for tax purposes during the enterprise income tax settlement.
Article 59 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China and the State Council (State Council Decree No. 512), which came into effect after the unification of the domestic and foreign-invested enterprise income tax law in 2008, stipulates that, "Enterprises shall, in accordance with the nature and use of fixed assets, reasonably determine the estimated net residual value of fixed assets." The tax law, like accounting, does not have a specific net residual value standard, which is reasonably estimated by the enterprise.
On the depreciation period of fixed assets
In accounting, neither the 1993 sub-industry accounting system, nor the 2000 enterprise accounting system, nor the later enterprise accounting standards have stipulated specific depreciation periods for each fixed asset.
In Enterprise Accounting Standard No. 4 - Fixed Assets, it is stipulated that "Enterprises determining the useful life of fixed assets should take into account the following factors: (1) the expected production capacity or physical production; (2) the expected tangible and intangible wear and tear; and (3) the legal or similar provisions on the restrictions on the use of the asset."
Changes in Tax Provisions:
Article 35 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises (Decree No. 85 of the State Council, 1991) stipulates that, "The minimum years for the calculation of depreciation of fixed assets shall be as follows: (1) twenty years for houses and buildings; (2) twenty years for trains, ships, machines , machinery and other production equipment, for ten years; (3) electronic equipment and means of transportation other than trains and ships, as well as apparatus, tools and furniture related to production and business operations, for five years."
The Rules for the Implementation of the Provisional Regulations on Enterprise Income Tax of the People's Republic of China*** and the People's Republic of China (Cai Fa Zi [1994] No. 3) do not contain specific provisions.
Article 25 of the Notice on the Issuance of Measures for Pre-tax Deduction of Enterprise Income Tax (Guo Shui Fa [2000] No. 84) stipulates that, unless otherwise stipulated, the minimum number of years for depreciation of fixed assets is as follows: (1) 20 years for houses and buildings; (2) 10 years for trains, ships, machinery, machines, and other production equipment; (3) 10 years for electronic equipment, and for trains and ships means of transportation other than trains, ships, as well as apparatus, tools and furniture related to production and operation for 5 years.
Article 60 of the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China (State Council Decree No. 512) after the Unified Enterprise Income Tax Law for Domestic and Foreign Investments in 2008 stipulates that: "Except as otherwise provided by the competent authorities of the State Council in charge of finance and taxation, the minimum number of years for the calculation of depreciation of fixed assets shall be as follows: (1) houses and buildings, 20 years; (2) airplanes, trains, ships, machines, machinery and other production equipment, 10 years; (3) apparatus, tools, furniture, etc., related to production and business activities, 5 years; (4) means of transportation other than airplanes, trains and ships, 4 years; (5) electronic equipment, 3 years."
Provisions on accelerated depreciation
The state has strict control over the method of shortening the depreciation period for depreciation depreciation, and easily does not open this mouth.
Article 40 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises (Decree No. 85 of the State Council, 1991) stipulates: "Fixed assets that need to be shortened in depreciation due to special reasons may be applied for by the enterprise, and then reported to the State Administration of Taxation for approval by the State Administration of Taxation at each level after examination by the local tax authorities. The fixed assets mentioned in the preceding paragraph which need to shorten the depreciation life due to special reasons include: (1) machines and equipments which are strongly corroded by acid, alkali and other strong corrosive substances and plants and buildings which are always in the state of shocking and trembling; (2) machines and equipments which are always in the state of running day and night due to the increase of utilization rate and the strengthening of the intensity of use."
Article 26 of the Notice on the Issuance of Measures for Pre-tax Deduction of Enterprise Income Tax (Guo Shui Fa [2000] No. 84) stipulates that: for key equipment that promotes scientific and technological progress, environmental protection and investment encouraged by the state, as well as machinery and equipment that are in the state of vibration, super-intense use or strongly corroded by acids and alkalis all year round, and which are in need of shorter depreciation life or accelerated depreciation methods, the taxpayer shall apply for them and, upon the request of the local government, the taxpayers shall apply for them. The taxpayer shall submit an application, which shall be examined and approved by the local competent tax authorities and then reported to the State Administration of Taxation for approval at each level.
The State Administration of Taxation stipulates in the Circular on the Follow-up Management of the Approval Project for Accelerated Depreciation of Fixed Assets Under Decentralized Management (Guo Shui Fa [2003] No. 113) that:
The enterprises or fixed assets that are allowed to implement the accelerated depreciation are five categories
(1) electronic production enterprises, shipbuilding enterprises, enterprises producing "mother machines", enterprises producing "motherboards", enterprises producing "motherboards", and enterprises producing "motherboards", and enterprises producing "motherboards". Enterprises, the production of "mother" machinery enterprises, aircraft manufacturers, chemical manufacturers, pharmaceutical manufacturers of machinery and equipment;
(2) the promotion of scientific and technological progress, environmental protection and the state to encourage investment projects in key equipment, as well as perennial vibration, ultra-strength use or acid, alkali and other strong corrosion of machinery and equipment;
(2) the promotion of science and technology, environmental protection and the state to encourage investment projects, as well as perennial vibration, ultra-strength use or acid, alkali and other strongly corrosive Machinery and equipment;
(3) electronic equipment of securities companies (minimum depreciation of 2 years);
(4) production equipment of integrated circuit manufacturers (minimum depreciation of 3 years);
(5) outsourced software that meets the standard of fixed assets or constitutes intangible assets (minimum depreciation of 2 years).
The accelerated depreciation method of fixed assets is not allowed to use the method of shortening the depreciable life, and the declining balance method or the sum-of-the-years method should be used for fixed assets that meet the above accelerated depreciation conditions.
So from the above analysis, it can be seen that the decision of the State Council executive meeting, which allows enterprises to directly charge fixed assets below the limit to costs, or shorten the depreciation life, or use accelerated depreciation, is a short-term tax policy support for enterprises. Only need to adjust the enterprise in the calculation of taxable income, does not need to change the original accounting method of the enterprise.