The depreciable life of fixed assets is clearly defined according to different types of assets. For example, the depreciable life of houses and buildings is 20 years, large equipment such as airplanes and trains is 10 years, production appliances are 5 years, means of transportation is 4 years, and electronic equipment is 3 years. These years are determined by the enterprise according to the nature of the assets and the use of the situation, once determined, shall not be changed at will.
The salvage rate, on the other hand, is the ratio of the value of an asset at the end of its useful life, which is expected to be recovered, to its initial acquisition cost. When a fixed asset is no longer usable and needs to be liquidated, the salvage rate can be calculated by dividing the liquidation proceeds by the original purchase price and multiplying by 100%. The level of the salvage rate directly affects the calculation of the net loss of the asset.
Understanding depreciation and salvage value of fixed assets helps companies amortize their costs reasonably and follow accounting standards, while ensuring compliance when filing tax returns. For example, the depreciation treatment of unused fixed assets, assets in the process of upgrading and renovation, and specific types of land require special attention. In practice, companies should fully consider the depreciation base, net salvage value, depreciable life and depreciation method in accordance with the guidelines and tax laws to ensure the accuracy of the depreciation amount.