Unless otherwise stipulated by the competent departments of finance and taxation of the State Council, the minimum depreciation period of fixed assets is as follows:
(a) houses and buildings, for 20 years;
(2) Aircraft, trains, ships, machines, machinery and other production equipment, 10 year;
(3) Appliances, tools and furniture. 5 years related to production and business activities;
(4) Four years for vehicles other than airplanes, trains and ships;
(five) electronic equipment, for 3 years.
1, life average method
The average age method, also known as the straight line method, is the simplest and most commonly used method. This method is based on the original price of fixed assets MINUS the estimated net salvage value divided by the estimated service life, and the annual depreciation expense is obtained. In each service life, the value of fixed assets transferred to product cost is equal, and the accumulated depreciation shows a linear upward trend. This method is easy to understand and operate, but it also has some obvious limitations. It ignores the matching principle of "when to benefit and when to pay".
Calculation formula:
Annual depreciation rate =( 1- estimated net salvage value rate) ÷ estimated service life (year) × 100%.
Monthly depreciation amount = original price of fixed assets × annual depreciation rate12
Insufficient life average method:
First of all, the operating efficiency of fixed assets in the initial stage of use is relatively high, and the income from using assets is relatively high. According to the principle of matching income with expenses, the depreciation amount that should be withdrawn in the early stage should be relatively large.
Secondly, the total cost of using fixed assets includes depreciation expenses and repair expenses. Usually, the repair cost will gradually increase in the later period of the use of fixed assets. However, the depreciation expense of the average life method is constant in each period. This causes the total cost to increase gradually, which does not conform to the proportion principle.
Thirdly, the average life method does not consider the utilization degree and intensity of fixed assets, and ignores the difference between the use and wear degree of fixed assets and the difference in work efficiency.
Finally, the average life method does not consider the influence of intangible loss on fixed assets.
Advantages of life average method:
The biggest advantage of the average life method is that it is simple, easy to master and simplifies accounting. So it has been widely used in practical work.
Scope of application of life average method:
In practical work, which fixed assets are more suitable for using the average life method? According to the reasonable factors affecting the depreciation method. When the use of a fixed asset in each period is roughly the same and its load degree is the same. The cost of repair and maintenance does not change significantly during the life of the asset. When the return on assets is similar throughout life. When all these conditions are met or partially met, it is reasonable to choose the average life method. In practical work, the average life method is applicable to the depreciation calculation of fixed assets such as houses and buildings.
2. Workload method
Workload method, also known as variable cost method. It is a method to extract depreciation amount according to actual workload. Its theoretical basis is that the decrease of asset value is a function of asset use. Depreciation is accrued according to the business activities of the enterprise or the use of equipment. Assume that the cost of fixed assets represents the purchase of a certain number of service units (which can be mileage, working hours or output), and then allocate the cost according to the service units. This method makes up for the feature that the average service life method only emphasizes the service time and ignores the service intensity.
Calculation formula:
Depreciation amount per unit workload = original price of fixed assets ×( 1- estimated net salvage value rate)/estimated total workload.
Monthly depreciation of fixed assets = monthly workload of fixed assets × depreciation of unit workload.
Disadvantages of workload method:
First of all, it, like the average life method, fails to take into account factors such as the increase in repair costs, the decline in operating efficiency or income.
Third, it is difficult to accurately estimate the number of services that assets can provide.
Finally, the workload method ignores the impact of intangible losses on assets.
Advantages of workload method:
Of course, due to its own characteristics, it is more reasonable to use workload method in some cases. When tangible loss is more important than intangible loss. Or the use of assets is uneven in different periods. Not often used, so its usage is related to the production workload of the product. Under these conditions, you can choose the workload method.
Scope of application:
In practical work, in professional motorcades and passenger and freight cars such as transportation enterprises. For some large-scale machinery and equipment with great value, but not often used or used seasonally, the workload method can be used for depreciation.
3. Accelerated depreciation method
Accelerated depreciation method is also called rapid depreciation method or decreasing depreciation method.
It is characterized by more depreciation in the early period and less depreciation in the later period of the effective service life of fixed assets. Therefore, the depreciation rate is relatively accelerated, and the cost of fixed assets is quickly compensated within the effective service life.
Type: In practice, accelerated depreciation method includes sum of years method and double declining balance method.
The accelerated depreciation method is reasonable in theory:
First of all, the net income of fixed assets is decreasing within the service life. Fixed assets have high efficiency in the early stage and great income. At the same time, most investors in fixed assets will improve the utilization rate of fixed assets at the initial stage of investment.
Secondly, the maintenance cost of fixed assets is increasing year by year.
Thirdly, it is difficult to accurately estimate the future net income, and the risk of early income is less than that of late income.
Finally, the accelerated depreciation method considers the influence of intangible loss on fixed assets.
Therefore, the advantages of adopting accelerated depreciation method are:
(1) In the first few years, the work efficiency is high, the income is large, and the corresponding depreciation expense is large, which conforms to the principle of matching cost with income. At the same time, early depreciation also conforms to the principle of prudence.
② By raising the depreciation level and recovering the investment as soon as possible, the intangible losses and investment risks caused by inflation can be reduced.
(3) The reduced depreciation expense can be used to offset the increased maintenance expense, so that the profit of the enterprise can remain stable in the normal production year.
④ It can speed up the renewal of fixed assets and equipment, promote the technological progress of enterprises, stimulate production and economic growth, and thus increase the national fiscal revenue.
⑤ Depreciation has the function of "tax baffle", and enterprises can get an interest-free loan because of tax deferral. This is the government's policy measures to encourage investment, stimulate production and promote economic growth.
Scope of application:
The accelerated depreciation method is scientific and reasonable. According to its characteristics, it is suitable for enterprises with rapid technological progress and important position in the national economy. Such as electronic manufacturing enterprises, shipbuilding enterprises, aircraft manufacturing enterprises, automobile manufacturing enterprises, chemical medicine and so on. 3. 1 double declining balance method
Double declining balance method refers to a method to calculate the depreciation of fixed assets according to the initial original price of fixed assets minus accumulated depreciation (that is, the net value of fixed assets) and double straight-line depreciation rate without considering the estimated net residual value of fixed assets.
Calculation formula:
Annual depreciation rate =2÷ estimated service life (year) × 100%
Monthly depreciation amount = net value of fixed assets × annual depreciation rate12
As the estimated net salvage value is not deducted from the net value of fixed assets at the beginning of each year. Therefore, under the double declining balance method, we must be careful not to make the net value of fixed assets lower than its expected net residual value. Usually, within two years before the expiration of its depreciation period, the balance after deducting the estimated net salvage value from the net value of fixed assets is evenly amortized.
3.2 years is always legal.
The total legal life method, also known as the total life method, is to calculate the annual depreciation by multiplying the balance after deducting the estimated net salvage value from the original price of fixed assets by a fraction of the reasonable service life of fixed assets, and the numerator and denominator are the sum of the estimated service life year by year.
Calculation formula:
Annual depreciation rate = sum of acceptable service life/estimated service life × 100%.
Monthly depreciation amount = (original price of fixed assets-estimated net salvage value) × annual depreciation rate12
If a certain equipment is expected to be used for 5 years, the total expected service life is 15(5+4+3+2+ 1). The service life of fashion in the second year is 4, and the depreciation rate this year is 4/ 15.
Comparison of common depreciation methods
Although there are many depreciation methods, there are only four depreciation methods that enterprises are allowed to choose in China: straight-line method, workload method, double declining balance method and sum of years method. Once the depreciation method is determined, it shall not be changed at will. If changes are needed, they should be explained in the notes to the financial statements.
1, straight line method.
The straight-line method, that is, the average life method, assumes that depreciation is due to the passage of time rather than the use relationship, and thinks that the decisive factor for the decline of use potential is the obsolescence and damage caused by the passage of time rather than the tangible wear and tear caused by use. Therefore, it is assumed that the service potential of assets is the same in all accounting periods, regardless of their actual use.
Because the straight line method is simple, it is only correct under the following conditions.
① The interest factor can be ignored, or the investment cost is assumed to be zero;
(2) The cost of repair and maintenance is fixed during the whole service life of the asset;
③ The asset efficiency in the latest year is the same as that in the first year;
(4) The income (or cash flow) from the use of assets is fixed during the whole service life;
⑤ All necessary estimates (including expected service life) can be predicted with considerable certainty.
2. Workload method.
The workload method is a method to calculate depreciation according to the expected workload of fixed assets in the calculation period. The workload method is essentially a supplement and extension of the average life method. According to the regulations, passengers, trucks, large-scale equipment and large-scale construction machinery of enterprise professional fleet can be depreciated by workload method. Due to the different workload indicators of various professional equipment, the workload method can be divided into mileage depreciation method and working hours depreciation method. The workload method assumes that depreciation is a variable, not a fixed cost, that is, it assumes that the decrease in asset value is not due to the passage of time, but to use. For many kinds of assets, the assumption of workload method is reasonable, especially when tangible loss is more important than economic depreciation. The main purpose of using this depreciation method is to allocate input value according to each service unit, and the measurement of service value reduction is secondary.
Suggestions on improving depreciation of fixed assets
All the above depreciation methods are arbitrary, and the data they are based on, such as cash flow or net income, are quite difficult to measure. Therefore, depreciation methods need to be constantly updated and improved. Options that can be considered are:
(1) The value of the remaining assets is measured by the market price at the end of each period, and there is no distribution method;
(2) Replace the income statement with cash flow statement and capital flow statement to avoid depreciation distribution;
(3) Pay attention to the use of predictable unified depreciation method, regardless of its logic;
(4) Try to adopt a compromise distribution method.
In essence, depreciation is also a kind of expense, but this expense does not pay real monetary funds during the accrual period, but it has already occurred in the early stage, and the income of this expense is realized within the effective use period after the assets are put into use. Depreciation needs to be accrued from accrual basis principle or income-expense ratio principle. Enterprises should choose depreciation methods reasonably according to the applicable conditions of various depreciation methods.