Article 27 Fixed Assets refers to tangible assets held by a small business for the production of products, provision of labor services, leasing or business management, with a useful life of more than one year.
Fixed assets of small enterprises include: houses, buildings, machinery, machinery, means of transportation, equipment, appliances, tools and so on.
Article 28 Fixed assets shall be measured at cost.
(1) The cost of purchased fixed assets includes: the purchase price, relevant taxes, transportation, handling, insurance and installation costs, but does not include input VAT that can be deducted in accordance with the provisions of the Tax Law. If a number of fixed assets without separate price are purchased with a single payment, the total cost shall be allocated in proportion to the market price or appraised value of each fixed asset or similar asset, and the cost of each fixed asset shall be determined separately.
(ii) The cost of self-constructed fixed assets consists of expenditures (including related borrowing costs) incurred in the construction of the asset until its completion.
Products, by-products or trial run revenues resulting from the construction work in progress of a small enterprise in the course of trial run are deducted from the cost of construction work in progress.
(c) The cost of the investor's contribution to the fixed assets shall be determined on the basis of the appraised value and relevant taxes.
(iv) The cost of fixed assets under finance leases shall be determined on the basis of the total amount of payments agreed in the lease contract and relevant taxes incurred in the course of signing the lease contract.
(v) The cost of a fixed asset in surplus shall be determined on the basis of the market price or appraised value of a similar or analogous fixed asset, less depreciation estimated in accordance with the degree of newness of the fixed asset.
Article 29 A small enterprise shall depreciate all fixed assets, but depreciation shall not be charged on fixed assets that have been fully depreciated and continue to be used and on land that is separately valued and accounted for.
Depreciation of fixed assets shall be charged to the cost of the relevant assets or to current profit and loss according to the beneficiary of the fixed assets.
The depreciation referred to in the preceding paragraph refers to the systematic apportionment of the accrued depreciation amount over the useful life of the fixed assets in accordance with the determined method. Accrued depreciation is the amount of depreciable fixed assets should be depreciated original price (cost) less its estimated net salvage value. Estimated net salvage value is the net amount that a small business will receive from the disposal of a fixed asset after deducting the estimated disposal costs when the estimated useful life of the fixed asset has expired. Fully depreciated means that the full amount of depreciation accrued on the fixed asset has been provided.
Article 30 A small enterprise shall depreciate in accordance with the average annual life method (i.e., straight-line method, the same hereinafter). Small enterprises of fixed assets due to technological advances and other reasons, accelerated depreciation is required, can adopt the double declining balance method and the sum-of-the-years method.
Small enterprises should be based on the nature and use of fixed assets, and take into account the provisions of the tax law, a reasonable determination of the useful life of fixed assets and the estimated net residual value.
Once determined, the depreciation method, useful life and estimated net residual value of fixed assets shall not be changed arbitrarily.
Article 31 of the small enterprises shall be depreciated monthly, the month increase in fixed assets, no depreciation in the month, depreciation from the next month; the month decrease in fixed assets, the month is still depreciated, no depreciation from the next month.
Article 32 The daily repair costs of fixed assets shall be charged to the cost of the relevant assets or to the profit and loss of the current period when they are incurred according to the beneficiary of the fixed assets.
Article 33 Alteration expenditures of fixed assets shall be included in the cost of fixed assets, but alteration expenditures incurred on fully depreciated fixed assets and fixed assets leased-in for operation shall be included in long-term amortization expenses.
The alteration expenditures of fixed assets referred to in the preceding paragraph refer to the expenditures incurred for changing the structure of the house or building and extending its useful life.
Article 34 For the disposal of fixed assets, the net amount of the disposal income after deducting its book value, relevant taxes and clean-up costs shall be included in non-operating income or non-operating expenditure.
The book value of fixed assets referred to in the preceding paragraph refers to the original price (cost) of the fixed assets after deducting the accumulated depreciation.
Losses incurred in the inventory loss of fixed assets should be included in non-operating expenses.
Article 35: Productive biological assets refer to biological assets held by small enterprises (agriculture, forestry, animal husbandry and fishery) for the purpose of producing agricultural products, providing labor services or leasing. It includes: economic forests, fuelwood forests, productive animals and draft animals, etc.
Article 36 Produced biological assets shall be measured at cost.
(1) The cost of purchased productive biological assets shall be determined in accordance with the purchase price and relevant taxes.
(2) The cost of self-created or propagated productive biological assets shall be determined in accordance with the following provisions:
1. The cost of self-created forest-based productive biological assets shall include the necessary expenditures such as afforestation fees, nurturing fees, forestry facilities fees, good seed test fees, investigation and design fees, and apportionment of overhead costs incurred before reaching the intended production and operation purposes.
2. The cost of self-breeding livestock and draft animals includes the necessary expenditures such as fodder costs, labor costs and shared overhead costs incurred before reaching the intended production and management purposes.
The reference to reaching the intended production and business purposes in the preceding paragraph means that the productive biological assets have entered the normal production period, and can continuously and stably produce agricultural products, provide labor services or lease them out for many years.
Article 37 The productive biological assets shall be depreciated in accordance with the average annual life method.
Small enterprises (agriculture, forestry, animal husbandry and fisheries) shall reasonably determine the useful life and estimated net residual value of productive biological assets in accordance with the nature and use of such assets and taking into account the provisions of the Tax Law.
Once determined, the depreciation method, useful life and estimated net residual value of a productive biological asset shall not be changed arbitrarily.
Small enterprises (agriculture, forestry, animal husbandry and fisheries) shall depreciate monthly from the month following the month in which the productive biological assets are put into use; productive biological assets that have ceased to be used shall cease to be depreciated from the month following the month in which they cease to be used.