Depreciation in accounting is the process of transferring in parts the value of fixed assets and intangible assets as they become physically or morally depreciated to the cost of manufactured products (works, services ).
In the production process, a number of resources ( working capital - labor, raw materials, electricity, fuels and lubricants ) are completely transformed or destroyed during each production cycle. Their cost is fully included (carried over) in the cost of the final product. Another part of the resources ( fixed assets - equipment, buildings, structures, land, animals, gardens), participate in several production cycles, often retaining their natural form for a long time. But after some time fixed assets will need to be repaired, modernized or replaced, including due to obsolescence . It is quite obvious that the cost of fixed assets, their repair or replacement should be uniformly transferred to the cost of all products in the production of which they participate. Since it is extremely difficult or impossible to accurately determine this amount, they usually proceed from the standard service life. For example, if a machine has to work for 10 years without repair, then every year 1/10 of the cost of the machine (or 1/120 per month) should be transferred to products. This share of the value of fixed assets distributed over the agreed period is called depreciation . For the purpose of simplification and standardization of accounting, fixed assets are grouped and for each group its own standard for depreciation is established.
A special fund is formed from depreciation deductions, which is used to replace, modernize or repair fixed assets.
Content
- 1 Terminology
- 2 Depreciation in Russian practice
- 2.1 Depreciation in accounting
- 2.2 Depreciation in tax accounting
- 3 notes
- 4 References
- 5 Literature
Terminology
Depreciation deductions - deductions of a part of the value of fixed assets to compensate for their depreciation. Depreciation deductions are included in production or distribution costs . Produced by commercial organizations on the basis of established norms and book value of fixed assets , which are depreciated.
Depreciation charges are made at certain rates relative to the carrying amount of the fixed assets. To find the depreciation period , you need to divide 100 by the depreciation rate.
Depreciation rate is the established annual percentage of the reimbursement of the value of the depreciated part of fixed assets.
Depreciation in Russian practice
Depreciation in accounting
According to Russian accounting standards ( PBU 6/01 ), there are four main ways of calculating depreciation for accounting for fixed assets:
- Linear method - there is a uniform accrual of depreciation from the initial to the residual value (at the end of the service life) during the entire period of use. The current residual value is determined by subtracting the total accumulated depreciation of the fixed asset from the original cost.
- The way to reduce the balance - the amount of depreciation for each period is equal to the residual value multiplied by a certain percentage. Each year depreciation is charged to the residual value at the beginning of the year.
- The method of writing off the cost in proportion to the volume of production (work) - depreciation is calculated on the basis of some natural indicator (for example, the machine-hour of equipment use) [1] .
- The method of writing off the value by the sum of the number of years of the useful life
Depreciation in tax accounting
This term is used in the same sense in Russian tax accounting as applied to depreciable property. In contrast to international practice, in Russian accounting, depreciation is quite formal in nature, since it characterizes not so much real depreciation as legislatively established depreciation limits that allow you to reduce the tax base of income tax . For the purposes of the Russian tax accounting for income tax, two methods of calculating depreciation can be applied:
- Linear way
- Nonlinear way
The company can independently choose the depreciation method, unless otherwise provided by law in relation to certain objects. A prerequisite is the application of the selected depreciation method to a group of similar objects over the entire useful life.
In accordance with the current Russian tax legislation (Chapter 25 of the Tax Code), for tax accounting purposes, property is divided into depreciable and non-depreciable assets. Depreciable property includes property of an enterprise, organization and entrepreneur, presented in the form of the results of intellectual activity, property, or other objects of intellectual property that are held by the taxpayer on the basis of ownership, are used by him to generate income [2] . Unlike non-depreciable property, its value is repaid by depreciation. Property is recognized as depreciable if its service life is more than 12 months and its initial value is more than 100 thousand rubles. (until January 1, 2016 - more than 40 thousand rubles). In accordance with the useful lives of the depreciable property, it is distributed among depreciation groups [3] , each of which has its own useful life:
- Group I - property with a useful life of 1 to 2 years,
- Group II - the useful life of 2-3 years,
- Group III - 3-5 years,
- Group IV - 5-7 years,
- V group - 7-10 years,
- VI group - 10-15 years old,
- VII group - 15-20 years old,
- VIII group - 20-25 years old,
- IX group - 25-30 years old,
- X group - over 30 years ...
Notes
- ↑ Gerasimenko, 2011 , p. 127.
- ↑ Lukash Yu. A. The property of the organization is depreciable . Encyclopedic dictionary - reference book of the head of the enterprise. Date of treatment January 9, 2011. Archived February 18, 2012.
- ↑ Depreciable property . Financial, accounting and tax terminology. Date of treatment January 9, 2011. Archived February 18, 2012.
Links
- Depreciation (declaration of invalidity) // Brockhaus and Efron Encyclopedic Dictionary : in 86 volumes (82 volumes and 4 additional). - SPb. , 1890-1907.
- The article "Depreciation or what is realism"
- “Enterprise Economics”, T. I. Yurkova, S. V. Yurkov
Literature
- Alexey Gerasimenko. Financial reporting for managers and novice professionals. - M .: Alpina Publisher , 2011. - 440 p. - ISBN 978-5-9614-1665-7 .