Fixed assets depreciation common 4 calculation methods
1, the average annual method (also known as the straight-line method) is the simplest way to calculate the amount of depreciation in each period is equal to the formula:
Example: A company on March 8, 2021, the purchase of a production equipment does not need to be installed and immediately put into use. The value-added tax (VAT) special invoice states that the price of the equipment is 3 million yuan, and the VAT amount is 260,000 yuan. The equipment is depreciated using the straight-line method, with an estimated useful life of 5 years and an estimated net salvage value of 0. The amount of depreciation to be charged for the equipment in 2021 is:
300 ÷ 5 × 9/12 = 450,000 yuan
2. Workload method (depreciation per unit of workload equals to the amount of depreciation)
Depreciation per unit of workload = original value of the fixed asset x (1) -net salvage rate)/expected total workload
Monthly depreciation of a fixed asset = the workload of the fixed asset in the month × depreciation per unit of workload
Example: the original price of a delivery truck of Company B is 600,000 yuan, the total estimated mileage of 500,000 kilometers, the estimated net salvage rate of 5%, September 2021, driving 0.4 million kilometers. Then:
Depreciation per unit mile = 60 × (1-5%)/50 = 1.14 (yuan/km)
Depreciation in September 2021 = 0.4 × 1.14 = 45.6 million yuan
3, double declining balance method (double straight-line depreciation rate, belonging to the accelerated depreciation) This method does not take into account the fixed asset This method does not take into account the residual value of fixed assets, and the last 2 years need to be changed to the straight-line method
Double declining balance method depreciation rate = 2/estimated useful life × 100%
Annual depreciation = the beginning of the period of the net book value of fixed assets × double straight-line depreciation rate
Monthly depreciation = annual depreciation / 12
Last two years to the straight-line method: will be the penultimate year of the beginning of the net book value of fixed assets less The net book value of the fixed asset at the beginning of the penultimate year is deducted from the estimated net salvage value and amortized equally over two years
Example A fixed asset of Company C has an original value of $100,000, an estimated net salvage value of $10,000, and an estimated useful life of 5 years. The fixed asset is depreciated using the double-declining balance method. In the year of depreciation: annual depreciation rate = 2/5 × 100% = 40%
Depreciation in year 1 = 10 × 40% = 4 ($10,000)
Depreciation in year 2 = (10-4) × 40% = 24 ($10,000)
Depreciation in year 3 = (10-4 2.4) × 40% = 1.44 (million yuan)
Depreciation in years 4 and 5 (changed to the straight-line method) = [(10-4-2.4-1.44) - 1]/2 = 0.58 ( million)
4, sum-of-the-years method (accelerated depreciation)
Annual depreciation = (original value of fixed assets - net salvage value) × annual depreciation rate
Example of a fixed asset in Company D, the original value of 100,000 yuan, the estimated net salvage value of 10,000 yuan, and the expected life of the fixed asset is 5 years. The fixed asset is depreciated by the sum-of-the-years method. In the year of depreciation:
Sum of years = 5 + 4 + 3 + 2 + 1 = 15
Year 1 depreciation = (10-1) × 5/15 = 3 (million dollars)
Year 2 depreciation = (10-1) × 4/15 = 24 (million dollars)
Year 3 Depreciation = (10-1) x 3/15 = 18 (million dollars)
Year 4 depreciation = (10-1) x 2/15 = 12 (million dollars)
Year 5 depreciation = (10-1) x 1/15 = 0.6 (million dollars)
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