Methods of calculating depreciation of fixed assets

Fixed assets are assets of the enterprise used for a long period to provide services, perform work, produce or manage.

As the main organization takes into account assets subject to the following conditions simultaneously.

The object is used directly for rendering services, performing works, producing products, for use in management, for leasing. The period of use of the facility should be more than one year. The subsequent resale of the asset is not allowed. The object in the future is capable of giving economic benefits to the enterprise.

The fixed assets include structures, various buildings, power and working units, equipment and machinery, transport, computer equipment, inventory (economic and production), perennial plantations, etc.

Accounting and methods for calculating depreciation of fixed assets

During production or under the influence of the external environment, the fixed assets gradually wear out, they transfer their initial value during the regulatory period of use to production costs. In accounting, this is displayed by accruing to the established norms of depreciation. In this case, they talk about depreciation, which is a monetary expression of a decrease in the use of fixed assets by the initial cost of their technical, physical and economic qualities. In another way, depreciation expresses the process of accumulation of money that will go to renew obsolete objects. This is done by including depreciation charges in the costs .

In the guidelines for accounting for fixed assets, such methods of calculating depreciation as a method of decreasing balance, a linear method, writing-off of costs using the sums of the numbers of years of useful life, and writing-off of costs in proportion to the amount of work (produced by the product) are considered.

Linear ways to calculate depreciation

This method allows you to calculate the depreciation rate for the year in the usual way. The initial data for the calculation is the useful life (use) of the object. Formula: 1 / number of years * 100%. The amount of depreciation for the year is calculated by multiplying the replacement initial cost by the higher calculated annual rate.

Nonlinear method of calculating depreciation

With the help of a decreasing balance, depreciation for the year is calculated by multiplying the depreciation rate by the value (residual) of the fixed asset that was formed at the beginning of the reporting year.

When the value is written off for the sum of the useful life years, the annual depreciation is determined by the product of the initial value of the asset by the annual ratio, which is calculated by dividing the remaining funds before the end of the service life by the sum of the years of the useful life of the object.

The method of proportional write-off of costs calculates depreciation by multiplying the indicator of the volume of work performed (output) in physical terms for the reporting period and depreciation rates. The last factor is calculated by the ratio of the initial value of the asset and the projected release of goods (works) for the entire useful life of the asset. In this case, the calculation of the amount of depreciation is made every month.

For taxation, it is allowed to use different ways of calculating depreciation. However, for a certain fixed asset, you must select one method that will be used continuously in the calculation.

Generally, it is recommended to calculate depreciation using the linear method in tax and accounting. In this case, the data of both accounts will coincide, especially since linear methods of calculating depreciation are the simplest.