1. Average Life Method
The average life method, also known as the straight-line method, is a method of spreading the depreciation of fixed assets evenly over the periods. The amount of depreciation calculated using this method is equal for each period. The formula is as follows:
Annual depreciation rate = (1 + projected net salvage rate) / projected useful life × 100%
Monthly depreciation rate = annual depreciation rate ÷ 12
Monthly depreciation = original cost of the fixed asset × monthly depreciation rate
The depreciation rate calculated above is based on the individual fixed asset, known as the individual rate of depreciation, that is, the amount of depreciation of a fixed asset in a certain period of time compared to the amount of depreciation of that fixed asset. Depreciation of a fixed asset in a certain period of time and the ratio of the original price of the fixed asset. Usually, the enterprise according to the classification of depreciation to calculate the depreciation rate, the formula is as follows:
a fixed asset annual depreciation = (a fixed asset original value - estimated salvage value + cleaning up costs) / the useful life of the fixed asset
a fixed asset monthly depreciation = a fixed asset annual depreciation / 12
a fixed asset Annual depreciation rate = annual depreciation of fixed assets / original cost of fixed assets × 100%
The use of categorical depreciation rates to calculate depreciation of fixed assets is simple, but less accurate than individual depreciation rates.
Calculating depreciation of fixed assets using the average life method is simple, but there are some limitations. For example, fixed assets in different useful lives to provide different economic benefits, the average life method does not take this fact into account. Another example, fixed assets in different years of maintenance costs are not the same, the average life method does not take this factor into account.
Therefore, only when the load degree of fixed assets in each period is the same, each period should be assessed the same depreciation expense, the average life method of depreciation is reasonable.
2. Workload method
The workload method is a method of depreciation based on actual workload. This method can make up for the average life method only heavy use of time, do not take into account the shortcomings of the intensity of use, the formula is:
Each workload depreciation = {fixed assets original price × (1 - salvage rate) the total expected workload of a fixed asset monthly depreciation = the fixed asset workload of the month × the first workload depreciation amount
3. Accelerated Depreciation Accelerated depreciation method
Accelerated depreciation method, also known as rapid depreciation or declining depreciation method, which is characterized by more depreciation in the first period of the effective life of the fixed assets, less depreciation in the later period, thus relatively accelerating the depreciation of the speed, so that the cost of the fixed assets to accelerate the effective use of the useful life of the compensation.
There are two commonly used accelerated depreciation method:
(1) Double Declining Balance Method
Double Declining Balance Method is a method of calculating the depreciation of fixed assets based on the net book value of the fixed assets at the beginning of each period and double straight-line depreciation without considering the salvage value of the fixed assets. The formula is as follows:
Annual depreciation rate = 2/estimated depreciable life × 100%
Monthly depreciation rate = annual depreciation rate ÷ 12
Monthly depreciation = net book value of fixed assets × monthly depreciation rate
This method does not take into account the salvage income of the fixed assets, and therefore does not enable the book depreciated value of the fixed assets to be lowered to its projected salvage income Below, that is, the implementation of the double declining balance method of depreciation of fixed assets, should be in the last two years of the expiration of the depreciable life of its fixed assets, the net fixed assets deducted from the estimated net salvage value of the balance of the average amortization.
For example: a fixed asset of an enterprise with an original cost of 10,000 yuan, the estimated useful life of 5 years, the estimated net salvage value of 200 yuan, according to the double-declining-balance method of depreciation, the amount of depreciation for each year as follows:
Double balance of the annual depreciation rate = 2/5 × 100% = 40%
Depreciation payable in the first year = 10,000 × 40% = 4000 ( The amount of depreciation due in the second year = (10,000-4,000) × 40% = 2,400 yuan)
The amount of depreciation due in the third year = (6,000-2,400) × 40% = 1,440 yuan)
Depreciation will be calculated on the basis of the average life method (straight-line method) from the fourth year onwards.
From the fourth year onwards, depreciation is calculated according to the average life method (straight-line method).
Annual depreciation for the fourth and fifth years = (10,000-4,000-2,400-1,400-200)/2 = 980 (yuan)
(2) Sum-of-the-years method
Sum-of-the-years method is also known as the aggregate life method. Known as the total life method, is the original value of fixed assets minus the net salvage value of the net and a declining fraction of the annual depreciation amount, the fraction of the numerator on behalf of the number of years the fixed assets can still be used, the denominator represents the use of the number of years of the year-by-year numerical sum. Calculation formula for:
Annual depreciation rate = the number of years remaining to be used / the estimated number of years of depreciation of the sum
or: annual depreciation rate = (estimated useful life - has been used) / (estimated useful life × { estimated useful life +1} ÷ 2 × 100%
Monthly depreciation rate = annual depreciation rate ÷ 12
Monthly Depreciation Amount = (Original value of fixed assets - Estimated net salvage value) × Monthly depreciation rate
Still to illustrate the previous example, if the sum-of-the-years method is used, the depreciation for each year is shown in the following table:
Original value - Net salvage value Depreciation per year Accumulated depreciation
Year Remaining useful life Variation of depreciation rate
($) ($)
1 5 9 800 5/15 3 266.7 3 266.7
2 4 9 800 4/15 2 613.3 5 880
3 3 3 9 800 3/15 1 960 7 840
4 2 9 800 2/15 1 306.7 9 146.7
5 1 9 800 1/15 653.3 9 800
From the above table, it can be seen that the depreciation expense calculated by the sum-of-the-years method decreases with the increase of the number of years, so as to maintain the balance of the cost of using fixed assets and to prevent the loss of fixed assets due to lack of wear and tear.
Reference:
Chinese Tax Planning Network