Equipment depreciation expense is calculated as follows:
Determine the depreciation method; determine the original value of the asset; and determine the estimated useful life and salvage rate. Based on these factors, calculate the amount to be depreciated each year to determine the equipment depreciation expense.
1. Depreciation Methods
Equipment can be depreciated using different depreciation methods, such as straight-line depreciation, accelerated depreciation, and diminished value depreciation. The most commonly used is the straight-line depreciation method, under which the annual depreciation expense is (original value of the asset - salvage value) ÷ estimated useful life. Other depreciation methods can be determined according to the actual situation of the enterprise.
2. Original Asset Value
Original asset value refers to the purchase cost of an item of equipment, including the purchase price, installation and commissioning costs. When determining depreciation expense, you need to determine the original value of the asset and calculate the annual depreciation expense based on it according to the depreciation method.
3. Estimated useful life and salvage rate
Estimated useful life refers to the reasonable service life of a piece of equipment, usually based on the function of the equipment, the level of technology and use of the environment and other factors to determine. The salvage rate is the percentage of the value of the equipment remaining at the end of its useful life. When calculating depreciation expense, you need to determine the estimated useful life and salvage rate, and calculate the annual depreciation amount based on the depreciation method.
4. Depreciation accounting methods
Enterprises in the implementation of the accounting for equipment depreciation expense, usually using "debit depreciation expense, credit accumulated depreciation" or "debit depreciation expense, credit equipment annual depreciation "These methods are usually used to account for the depreciation of equipment. These methods can clearly record the inflow and outflow of equipment depreciation expense, in order to facilitate the enterprise financial management and cost control.
5. Average annual depreciation method
The accrued depreciation of fixed assets is spread evenly over the estimated useful life of the fixed assets with the formula: annual depreciation rate=((1-estimated net salvage rate)/estimated useful life)*100%, monthly depreciation rate=annual depreciation rate/12, and monthly depreciation=original price of the fixed assets*monthly depreciation rate.
In short, the calculation of equipment depreciation expense is an essential part of the financial management of the enterprise, the reasonable calculation and accounting of equipment depreciation expense can help enterprises control costs, maintain the value of equipment and improve economic efficiency.