Depreciation of fixed assets is an important part of enterprise asset management, which refers to the process of apportioning the original value of fixed assets to each accounting period according to a certain percentage in the course of use. The tax law specifies the number of years for depreciation of fixed assets, and enterprises must calculate the depreciation of fixed assets in accordance with the specified number of years.
Fixed Asset Depreciation Periods under the Tax Law
According to the Law of the People's Republic of China on Enterprise Income Tax and the Law of the People's Republic of China on Individual Income Tax, the depreciation periods for fixed assets stipulated in the tax law are as follows:
Buildings: 30 years
Railways, highways, bridges, tunnels, ports, airports and other transportation facilities: 20 years.
Machinery and equipment: 10 years
Electronic equipment, instruments, communication equipment and other high-tech products: 5 years
Furniture, appliances, cultural facilities, recreational facilities, etc.: 10 years
Operational steps for depreciation of fixed assets
The operational steps for depreciation of fixed assets are as follows:
Determination of original value of fixed assets: The original value of fixed assets refers to all the costs paid by the enterprise when acquiring fixed assets, including the purchase price, transportation costs, installation and commissioning costs, test drive costs and so on.
Determining the depreciable life of fixed assets: the depreciable life of fixed assets is determined in accordance with the provisions of the tax law.
Determine the depreciation method: enterprises can use the straight-line method or accelerated depreciation method for depreciation. Straight-line method refers to the original value of fixed assets according to the depreciable life of the average apportioned to each accounting period, each accounting period depreciation amount is equal. Accelerated depreciation method means that the depreciation amount is larger at the beginning of the use of fixed assets, and gradually decreases in the later stages of depreciation.
Calculation of depreciation for each accounting period: Calculate the depreciation for each accounting period based on the depreciation method and the original value of the fixed assets.
Bookkeeping: Record the depreciation amount for each accounting period in the fixed asset depreciation account and reduce the original value of fixed assets in the balance sheet.