How to calculate net salvage rate

The salvage rate algorithm takes the current value divided by the purchase price and multiplies it by one hundred percent, which is the calculated salvage rate for the fixed asset.

The concept of salvage rate is primarily a ratio that revolves around a fixed asset, a comparison that is made when the fixed asset can no longer be used or there is a need to account for it, i.e., the income and expenses around the fixed asset.

The net salvage value is that portion of the value of a fixed asset that remains at the end of its useful life, less the fixed asset cleanup costs that should be paid. The formula for calculating the net salvage rate is: net salvage rate = net salvage value of fixed assets / original value of fixed assets * 100%.

Expanded:

Basic Overview

Net salvage value is that portion of the value of a fixed asset that remains at the end of its useful life, minus the amount of fixed asset cleanup costs that should be paid. 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. The net salvage value of fixed assets as a percentage of the original value of fixed assets is generally between 3% and 5%.

Basic regulations on the residual value ratio of fixed assets

1. Domestic enterprises

Article 31 of the Provisional Regulations and Implementing Rules for the Enterprise Income Tax of the People's Republic of China and the People's Republic of China: the ratio of the residual value is within 5% of the original value, which is to be determined by the enterprises themselves. According to the "State Administration of Taxation on the abolition of the enterprise income tax approval project on the follow-up management of the notice" (Guo Shui Fa [2003] No. 70) the provisions of the second article of the fixed assets residual value of a uniform proportion of 5%.

2. Foreign-funded enterprises

According to Article 33 of the Rules for the Implementation of the Income Tax Law for Foreign-invested Enterprises and Foreign Enterprises, the residual value ratio of fixed assets for foreign-funded enterprises is generally 10%.

Fixed Asset Depreciation Limits

According to the New Enterprise Income Tax Law, the amortization limits are as follows:

Unless otherwise specified, the minimum years for depreciation of fixed assets are as follows:

(1) The estimated useful life of houses and buildings is 20 years;

(2) Trains, ships, machines, machineries, and other production equipment The estimated service life is 10 years;

(3) the estimated service life of tools, appliances and furniture for production and business is 5 years;

(4) the estimated service life of transportation means other than trains and ships is 4 years;

(5) the estimated service life of electronic equipment is 3 years.

The average life method, also known as the straight-line method, is a method of spreading depreciation of fixed assets evenly over periods.

1. When depreciation of fixed assets is calculated separately by individual fixed assets (individual depreciation rate), the formula is as follows:

Annual depreciation rate = (1 - estimated net profit residual value rate)/estimated useful life × 100%

Monthly depreciation rate = annual depreciation rate ÷ 12

Monthly depreciation = original cost of fixed assets × monthly depreciation rate

2, Depreciation of fixed assets according to the classification of depreciation depreciation rate (classification of depreciation rate), the formula is as follows:

Annual depreciation of a class of fixed assets = (the original value of a class of fixed assets - net salvage value) / the estimated useful life of the class of fixed assets

Annual depreciation of a class of fixed assets = (the original value of a class of fixed assets - the estimated salvage value + cleaning costs) / (the estimated salvage value + cleaning costs) / (the estimated salvage value + cleaning costs). Estimated salvage value + liquidation costs)/the estimated useful life of the class of fixed assets

Monthly depreciation of a class of fixed assets=Annual depreciation of a class of fixed assets/12

Annual depreciation rate of a class of fixed assets=Annual depreciation of a class of fixed assets/original cost of a class of fixed assets×100%

The use of a categorical rate to calculate the depreciation of fixed assets is simple to compute, but is not as accurate Not as good as individual depreciation rates