1. The residual value rate of fixed assets refers to the depreciation of assets calculated according to the straight-line method, which is allowed to be deducted. Enterprises should reasonably determine the estimated net residual value of fixed assets based on their nature and usage. Once the estimated net residual value of fixed assets is determined, it cannot be changed.
Unless otherwise provided, the minimum period for depreciation of fixed assets is as follows:
(1) 20 years for houses and buildings;
( 2) 10 years for aircraft, trains, ships, machines, machinery and other production equipment;
(3) 5 years for appliances, tools and furniture related to production and operation;
(4) 4 years for means of transportation other than airplanes, trains, and ships;
(5) 3 years for electronic equipment.
2. Residual value rate:
The concept of residual value rate is mainly a ratio around fixed assets. When the fixed assets can no longer be used or there is a need for accounting, A kind of comparison, that is, making a summary around the income and expenditure of fixed assets, dividing the current value by the purchase price, and then multiplying by 100%, is the calculated residual value rate of the fixed assets. For other residual values, please refer to the calculation method of fixed asset residual value rate.
Assets
Assets are resources formed from past transactions or events that are owned or controlled by an enterprise and are expected to bring economic benefits to the enterprise. For example, there are live money such as cash and bank deposits; there are also raw materials, finished products, semi-finished products, fixed assets and other things; and intangible things such as patent rights and trademark rights are also assets, and investments are also assets.
Assets need to be controllable. Things rented from others cannot be counted as one's own assets. Things rented to others, although not in one's hands, are still counted as one's own assets. The asset must be measurable in monetary terms and must be an economic resource. The so-called economic resources are things that can make money. For example, scrapped machinery should not be recorded as assets.
Liabilities
Liabilities are debts borne by an enterprise that can be measured in currency and need to be repaid with assets or labor services in the future. It is divided into current liabilities and long-term liabilities. Current liabilities generally refer to short-term debts, usually within one year or longer than one year but repaid within an operating cycle. Those longer than this are long-term liabilities.
If short-term borrowings are current liabilities, bank loans with a term of several years are long-term liabilities. Only current and past business create current debt. Debts incurred for expected business operations cannot be regarded as accounting debts. A liability is a financial obligation to be paid in the future, even if money is not available now. For example, the interest on a loan is usually paid half a year, but it must be recorded every month and the interest payable is treated as a liability. The liability must be valuable and must be a real debt that will be repaid with cash or other assets or services in the future, and must be supported by evidence.
Owner's equity
Owner's equity is the ownership of the company's net assets by corporate investors. It is the balance of all assets of the company minus all liabilities. There are two sources of funds, one is the money invested by shareholders, that is, owner's equity, and the other is borrowed money, that is, creditors' money. Since borrowings must be repaid, when a company does not perform well or loses money, the reduced money is the owner's equity. In other words, losses can only be lost to shareholders. Of course, when a company makes profits, owners' equity will also increase. Therefore, owners' equity is not necessarily equal to the initial investment amount of shareholders, but increases or decreases with the performance of the company.
Owner's equity is different from liabilities. Owner's equity shows who owns the business and does not need to repay it. Liabilities indicate to whom the company owes money and must repay it. Owner's equity does not need to pay interest but can participate in dividends, while liabilities need to pay interest but cannot participate in dividends. When a company goes bankrupt and liquidates, its liabilities must be paid off first, and any surplus will be repaid to investors.
Income
Income is the income generated from the business of the enterprise. It is the cash inflow that occurs and will occur when the enterprise sells products, provides services, or the settlement of debts. Revenue must be measurable in monetary terms, documented, and must match relevant expenses. Income will lead to an increase in corporate assets, and the net amount after deducting related expenses can lead to an increase in owner's equity. Therefore, revenue is an important part of a company's operating results and a basic indicator that reflects the quality of a company's economic benefits.
Expenses
Expenses are various expenses incurred by an enterprise in the production process. It can be understood as cost.
Including all expenditures of people, property, and materials that can be measured in money to obtain business income. The cost generally includes materials, labor and fees. Materials refer to materials; labor refers to labor, which can be understood as wages for labor; fees refer to various management expenses (which can be understood as management personnel wages), financial expenses (payment of interest), and sales expenses (such as advertising fees). Expenses must match income, that is, a price must be paid to obtain income. If expenses increase but income remains unchanged, owner's equity will decrease.
Profit
Income minus expenses is profit. If expenses are greater than income, it is loss.
Assets can be divided into monetary assets and non-monetary assets. One of the non-monetary assets is called fixed assets (fixed assets are those that can be used for a long time and remain stable during use. Labor materials and other material materials in their original physical form and their service life and individual value are above the limits specified by the state). When the fixed assets reach their useful life, they must be liquidated (fixed assets liquidation That is, accounting for the net value of fixed assets transferred to liquidation due to sales, scrapping, damage, etc., as well as the liquidation expenses and liquidation income incurred during the liquidation process), which may bring some income (these income can also be zero), these The residual value is the income divided by the asset's purchase price multiplied by 100 percent.
Provision for depreciation
Fixed assets and intangible assets are used to produce products and have costs. Its value is its cost, which needs to be included in the cost of the product. Amortization is required. This is why fixed assets are depreciated.
However, according to the accrual basis principle, the period of amortization of its costs should not be just one year, but its period of use. Therefore, it is necessary to reasonably estimate the cost to be amortized in each period, which is the annual depreciation and amortization amount. If it is fully amortized directly at the time of purchase, the current year's expenses will be very high, the profit will be reduced, and the profit in subsequent years will be overestimated. This is not allowed by accounting.
One of the main characteristics of fixed assets is that they can continuously function in several production cycles and maintain their original physical form, while their value is gradually transferred to the products produced as the fixed assets wear out. The value of fixed assets transferred to the product is the depreciation of fixed assets.
The origin of the concept of fixed asset depreciation
For enterprises, there is a simple formula, income - expenditure = profit. Fixed assets are actually bought by enterprises, so It is also a kind of expenditure, but the amount of this expenditure is often very large, and the benefit period is very long. If this expenditure is included in a certain month at once, it will lead to obvious losses in that month. In fact, the benefits obtained from the fixed assets in that month are not large. There will be so much. At the same time, the other beneficiary months do not reflect the appropriate expenditures. Therefore, after the fixed assets are recorded, the expenditures are averaged over the benefit period and are listed on a monthly basis. [3]
Notes on depreciation provision for fixed assets
1. Pay attention to the scope of depreciation provision. According to the current accounting standards for enterprises, except for the following circumstances, enterprises should pay attention to all fixed assets Provision for depreciation:
a. Fixed assets that have been fully depreciated and are still in use;
b. Land that is separately valued and recorded as fixed assets in accordance with regulations;
c. Fixed assets in the process of renewal and transformation. Depreciation is also required for unused machinery and equipment, instruments, transportation vehicles, tools and equipment, and seasonal out-of-service items.
2. Pay attention to the provision of fixed assets, which means that the provision for impairment of fixed assets should be considered.
3. Pay attention to the determination of the annual depreciation amount when the depreciation period spans multiple years.
When to accrue depreciation for fixed assets
The amount of depreciation accrued for fixed assets is affected by factors such as the depreciation base, net residual value, depreciation life, depreciation method, etc.
Legal basis:
The "Accounting Standards for Business Enterprises" (referred to as the "Standards") and the "Enterprise Income Tax Law of the People's Republic of China" and its Implementation Regulations (referred to as the "Tax Law") respectively regulate the depreciation of fixed assets. Extraction has been specified accordingly. Only by grasping the factors that determine the depreciation of fixed assets can we ensure that the depreciation amount is correct and tax payments will not be affected. Now we will compare the various factors that affect the depreciation amount of fixed assets from the standards and tax laws respectively.
Comprehensively grasping the factors that affect the depreciation of fixed assets can ensure that the depreciation amount is correct. However, in the actual production and operation of the enterprise, there will be some exceptions. Here are the following situations to explain how Provision for depreciation.
Article 31 of the "Interim Regulations and Implementation Rules of the People's Republic of China on Enterprise Income Tax": The proportion of residual value shall be within 5% of the original price and shall be determined by the enterprise itself. According to Article 2 of the "Notice of the State Administration of Taxation on the Follow-up Management of Canceled Enterprise Income Tax Approval Projects" (Guo Shui Fa [2003] No. 70), the residual value ratio of fixed assets is uniformly 5%. Foreign-funded enterprises: According to Article 33 of the "Implementing Rules for the Income Tax Law on Foreign-Invested Enterprises and Foreign Enterprises", the residual value rate of fixed assets of foreign-invested enterprises is generally 10%.