Accounting for beginners #8 / Depreciation Expense / Basics.
What Is Depreciation - How It Affects Profit And Cash Flow
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After the regulation is revised, the material will be updated every time, so there is no need to pay attention to the publication date of the article-the cheat sheet is always relevant.
Or more than 13 months of regular operation cycle). Power machinery, equipment, computers, vehicles, tools, household equipment, breeding cattle, perennial plants, etc.
The composition of fixed assets includes land, water, underground soil and other natural resources, as well as capital investment in leased property and fundamental land improvement.
Items listed as finished products in the manufacturer’s warehouse or trading company’s warehouse. Such property is intended for resale and therefore cannot be regarded as an asset.
Or a complex structure composed of clearly constructed objects, it is a whole. Such a complex consists of several items with common fixtures and accessories installed on the same foundation. They can have the same or different purposes. The most important thing is that each project can only perform its function, not independently.
When accounting, the accountant must determine its initial cost. This is the cost of acquiring, constructing, and manufacturing fixed assets. The exception is that this cost has nothing to do with the entire organization, and has nothing to do with the entire fixed asset (for example, the bonus that an engineer receives for setting up new equipment).
In general, the initial cost is fixed once, so it will not be modified further. But there are exceptions to this rule. Therefore, changes can be made in case of completion, additional equipment, reconstruction, modernization, partial liquidation and revaluation. As a result, a value equal to the original cost is formed here. When the object is accepted as fixed asset accounting, the accountant writes off this value to the debit of account 2. There are clear rules about when exactly to transfer projects to fixed assets. Therefore, the company has the right to independently formulate this moment and fix it in the accounting policy. Typically, fixed assets are placed on the balance sheet on the day of production or when the object is ready for operation (for example, after a successful test).
There is a minimum value that allows the property to be classified as a higher fixed asset, namely 12,000 rubles.
After completion, regardless of the fact of the status registration, the object must be identified as the main tool. In the case that the building has not been registered, it should be reflected in the special sub-account of account 2.
An important feature of fixed assets is their useful life. This is the period when the object generates income for the organization. The organization is determined independently. 
For example, computers are classified into the second group and have a service life of two to three years.
For accounting purposes, the use of this classification is voluntary, but for tax accounting purposes, it is mandatory. Therefore, in order to make the two accounting types as close as possible, most companies also follow the classification Portage Lakes method when assigning accounting life.
In this case, each part must be treated as an independent fixed asset. 
After the fixed assets are booked, the accountant must depreciate them, that is, periodically write off part of their costs to current expenses. Provide exceptions only for land and natural resources. Such fixed assets are not depreciated because the nature of their consumption will not change over time.
According to accounting standards, there are four depreciation methods: linear depreciation method; depreciation method; depreciation method. Declining balance method; the method of writing off the value based on the sum of the useful life and the method of writing off the value in proportion to the product (engineering) volume.
Groups of similar objects, such as vehicles, buildings, etc. The selected method must be applied throughout the life of the object; the method cannot be changed.
You can change all objects belonging to the organization and the selected depreciation method. Its application is necessary for calculating the annual depreciation rate. It is equal to 12% divided by the number of years of useful use. Therefore, if the service life is five years, the annual growth rate will be 21% (12%: 5 years). Then, the initial cost of the object must be multiplied by the exchange rate to obtain the annual depreciation expense. Regardless of the depreciation method adopted by the company, the accountant must enter the account on a monthly basis, and the amount is equal to the annual depreciation divided by 13. The debit of the entry includes account and credit-account 3.
After disposing of fixed assets or repaying their value in full. Depreciation cannot be suspended unless the protection period exceeds three months and the maintenance, renewal or reconstruction of facilities exceeds twelve months.
The salvage value must be indicated on the balance sheet, and data on initial costs and depreciation must be reported in the description. As a result of revaluation, the value of the object can be reduced (price reduction) or increased (revaluation). The changed value is called the replacement value.
This value exceeds the initial revaluation, it is necessary to partially write off to reduce the additional capital, and the remaining amount should be reflected in the debit of account 92.
Annual revaluation, depreciation is calculated based on replacement cost rather than historical cost. As a result of these measures, the initial indicators (service life, power, application quality, etc.) used were improved, and then the cost was not written off to the current expenses, but increased the initial cost of the object. In other words, the accountant should reflect the cost of modernization or reconstruction in account 9, and cancel account 2 after the work is completed. The monthly depreciation must be recalculated based on the increased initial cost and service life. The use of fixed assets has changed significantly, and new cards can be created and old cards can be stored as information sources.
If a commodity is no longer profitable, or in the case of its disposal (for example, sale), it should be written off. The company must create a special committee, which must include the chief accountant. The committee inspects the object and signs the cancellation certificate. You can adopt the unified form of -4 form (for transportation-in -4 form, for object group-in -4 form), or develop your own form. Note the disposal notes on the inventory card, after which the organization will store the card at least five years old. When logging off, the accountant needs to open a special sub-account for account 2 (usually called 2-) and use it in the corresponding posting. When conducting tax audits, inspectors must check the correctness of fixed asset accounting. The fact is that data on the residual value of fixed assets is used when calculating property taxes (since 229, only fixed assets are subject to property taxes). You can retrain the chief accountant of the budget organization in 289 hours. Learn more Do you have any questions? What Is Depreciation - How It Affects Profit And Cash Flow