There are four methods of depreciation are: average life method, workload method, double declining balance method, sum-of-the-years method.
1, the average life method
Average life method, also known as the straight-line method, is a method of depreciation of fixed assets spread evenly over the period. The amount of depreciation calculated using this method is equal for each period. The formula is as follows:
Annual Depreciation Rate = (1 - Estimated Net Residual Value Rate) / Estimated Useful Life (Years) * 100%
Monthly Depreciation Rate = Annual Depreciation Rate / 12
Monthly Depreciation Amount = Original Cost of Fixed Assets * Monthly Depreciation Rate
Calculating the depreciation of a fixed asset by using the average life method is simple, but there are also some limitations. Calculating depreciation using the average life method is reasonable only if the fixed assets are loaded to the same extent in each period and the same depreciation expense should be apportioned in each period.
2, workload method
Workload method is based on the actual workload depreciation amount of a method. This method can make up for the average life method only weight the use of time, do not take into account the shortcomings of the intensity of use. Calculation formula is:
Unit workload depreciation = fixed assets original price * (1 - expected net salvage rate) / expected total workload
A fixed asset monthly depreciation = the fixed asset workload in the month * unit workload depreciation
3, double declining balance method
Double declining balance method refers to the estimated net salvage value of the fixed asset is not taken into account In the case of fixed assets, according to the original cost of fixed assets at the beginning of each period less accumulated depreciation and double the straight-line depreciation rate of a method of calculating depreciation of fixed assets. The formula is as follows:
Annual depreciation rate=2/estimated useful life (years)*100%
Monthly depreciation rate=Annual depreciation rate/12
Monthly depreciation=net fixed asset value*monthly depreciation rate
This method does not consider the salvage income of the fixed asset, and therefore does not enable the book depreciation value of the fixed asset to be reduced to below its estimated salvage income. Below that, i.e., fixed assets depreciated by the double-declining-balance method should be amortized equally over the last two years of the expiration of the depreciable life of the fixed assets to the balance of the net value of the fixed assets after deducting the estimated net salvage value.
4, the sum-of-the-years method
The sum-of-the-years method is the original value of the fixed assets less net salvage value of the net and a declining fraction of the annual depreciation amount, the numerator of this fraction represents the number of years of the fixed assets are still available for use, and the denominator represents the number of years of use of the year-by-year digital sum. The formula is:
Annual depreciation rate = number of years remaining useful life / sum of years of estimated useful life * 100%
Sum of years of estimated useful life = n*(n+1)/2
Monthly depreciation rate = annual depreciation rate / 12
Monthly depreciation = (original cost of the fixed asset - estimated net salvage value)*monthly depreciation rate
< strong>
Extended information:
The minimum depreciable life of fixed assets
1. The minimum depreciable life of houses and buildings is 20 years.
Houses and buildings as the most important fixed assets, the service life is relatively long, the value of its use is also a relatively long process, according to the principle of income and expenditure ratio and other requirements, the depreciation of its life should also be relatively long, so the provisions of this article, houses, buildings, the minimum depreciation of 20 years, which basically reflects the reality of the use of houses and buildings.
2, airplanes, trains, ships, machines, machinery and other production equipment, the minimum depreciable life of 10 years.
Aircraft, trains, ships as a means of transportation, compared with other means of transportation, its performance is stronger, higher value, the use of a relatively long period of time, the depreciation period is correspondingly longer, the minimum depreciable life of such fixed assets is 10 years.
3, and production activities related to appliances, tools, furniture, etc., the minimum depreciable life of 5 years.
This type of fixed assets, in addition to machinery and equipment, but related to production and business activities, that is, not a direct tool of production, but in the process of production and business operations to play a supporting role in the appliances, tools, etc., their useful life is relatively short, the minimum depreciation limit of 5 years.
4, aircraft, trains, ships, other than the means of transportation, the minimum depreciable life of 4 years.
These means of transportation, relatively low value, shorter useful life, its depreciable life should be correspondingly shorter, so the provisions of this article, the minimum depreciable life of such fixed assets for 4 years.
5, electronic equipment, the minimum depreciable life of 3 years.
The minimum depreciable life of electronic equipment for 5 years, taking into account the rapid technological upgrading, electronic equipment, the use of a relatively shortened life and other practical factors, this article will be the minimum depreciable life of electronic equipment from 5 years to 3 years, so that the enterprise's depreciation deduction forward.
Reference:
Baidu Encyclopedia-Depreciation of Fixed Assets