Salvage value is the residual value of an asset that is expected to be recovered at the end of its useful life, i.e., the price that would be charged for the disposal of a fixed asset at the end of its useful life. If an asset is expected to be exchanged for a new asset at the end of its useful life, its residual value is equal to the value of the asset expected to be exchanged.
Enterprises use fixed assets in the production process and its wear and tear caused by the value of the reduction of only a certain residual value, the difference between its original value and the residual value of the fixed assets over its useful life of the fixed assets is fixed assets depreciation. Determine the scope of depreciation of fixed assets is the premise of depreciation
The essence of depreciation is the value of wear and tear of fixed assets, so the depreciation rate refers to the wear and tear of the value of the total value of the meaning of how much. Expressed as a rate, there is a sense of speed. Such as the annual depreciation rate of %, is the total value of one-tenth of the annual wear and tear value of the speed of calculation, or image, that is, one-tenth of the old one-tenth per year, the salvage rate refers to the fixed assets at the end of the total value of the value of the recyclable how much. Now you can see, because fixed assets can be recovered at the end of a certain residual value, so, in fact, the depreciation of fixed assets is for the total value of the residual value after subtracting the balance of the said.
How to calculate depreciation using the straight-line method
Average life
The average life method, also known as the straight-line method, is a method of spreading depreciation of fixed assets evenly over the periods. The depreciation calculated by this method is equalized for each period. Calculation formula is as follows:
Annual depreciation rate = (1 - estimated net salvage rate) / estimated useful life × 100%
Monthly depreciation rate = annual depreciation rate ÷ 12
Monthly depreciation = the original cost of the fixed assets × monthly depreciation rate
The above calculation of the rate of depreciation is calculated according to the individual fixed assets, known as the individual rate, that is, the amount of depreciation of fixed assets in a certain period of time and the fixed assets in a certain period of time. Depreciation of a fixed asset in a certain period of time and the ratio of the original cost of the fixed asset. Usually, the enterprise according to the classification of depreciation to calculate the depreciation rate, the formula is as follows:
Annual depreciation of a class of fixed assets = (the original value of a class of fixed assets - the estimated salvage value + cleaning up costs) / the use of the fixed assets of the class of the useful life of the fixed assets
Monthly depreciation of a class of fixed assets = a class of fixed assets depreciation/12
Annual depreciation rate of a class of fixed assets = the annual depreciation rate of the class of fixed assets Depreciation of a class of fixed assets = the annual depreciation of the class of fixed assets / the original cost of the class of fixed assets × 100%
The use of categorized depreciation rates to calculate depreciation of fixed assets, the calculation method is simple, but less accurate than the individual depreciation rate.
Based on the above, the residual value and depreciation of the difference, we can know that there is indeed a difference, the difference is also very large, the calculation of depreciation of fixed assets, take the straight-line method, for example, you need to use the original value of the residual value minus the residual value of the calculation, the residual value can be calculated by the estimated net salvage value rate. Daily we are often encountered in the depreciation of accounting problems.