Depreciation of fixed assets in accounting

What is depreciation

In accounting, depreciation is calculated according to the rules established by paragraphs 17-25 of PBU 6/01, approved by Order of the Ministry of Finance of the Russian Federation dated March 30, 2001 No. 26n (hereinafter referred to as PBU 6/01). Depreciation is the process of monthly transferring the cost of fixed assets to the costs of the current period. That is, by calculating depreciation, the cost of property assets is transferred to the cost of manufactured products (work performed, services provided), in other words, repaid (clause 17 of PBU 6/01).

In accordance with clause 49 of the Guidelines for accounting of fixed assets, approved by Order of the Ministry of Finance of the Russian Federation dated October 13, 2003 No. 91n (hereinafter referred to as Guidelines No. 91n), is subject to depreciation is :

• belongs to the organization by right of ownership;
• are under the organization’s economic control (or operational management);
• leased by an organization (or trust management, free use).

Depreciation is calculated (clause 49 and clause 50 of Methodological Instructions No. 91n):

• organization - for fixed assets owned by it;
• by the lessor - for fixed assets leased out;
• by the tenant - for fixed assets included in the property complex under the lease agreement of the enterprise (in the same manner as for fixed assets owned by right of ownership);
• by the lessor or lessee - for fixed assets that are the subject of a financial lease agreement (depending on the terms of the agreement).

Depreciation is not accrued according to (paragraphs 2-5, paragraph 17 of PBU 6/01, paragraphs 2 and 3, paragraph 49 of Methodological Instructions No. 91n):

• objects for mobilization purposes (mothballed and not used in the organization’s activities);
• objects of non-profit organizations (for such objects, depreciation is accrued using a linear method, which is recorded in off-balance sheet account 010 “Depreciation of fixed assets”);
• housing assets (residential buildings, dormitories, etc.), with the exception of those related to profitable investments in material assets (i.e., accounted for in account 03 and used to generate income);
• objects whose consumer properties remain unchanged over time (land plots, environmental management objects, objects classified as museum objects and museum collections, etc.).

Acceptance of fixed assets for accounting

So, the company has an operating system on which depreciation is calculated in accounting and tax accounting. It doesn’t matter whether the property was purchased, donated or contributed as payment for the authorized capital, the procedure for calculating depreciation does not depend on the method of obtaining fixed assets. But initially the asset is reflected as an investment in non-current assets. When should it be transferred to the operating system and start accruing depreciation?

In accounting, this should be done when the asset is ready to be used for its intended purpose. For example, a purchased machine that does not require installation is transferred to the OS immediately after it is received by the organization, since it is at this moment that you can begin to use it. In tax accounting, the situation is different: property that is used to generate income is initially recognized as depreciable (see Table 1).

Acceptance of fixed assets for accounting and choice of depreciation calculation procedure

Acceptance of fixed assets for accounting

The property is transferred to the fixed assets at the moment of readiness for operation (clause 4 of PBU 6/01 “Accounting for fixed assets”), the actual use of the fixed assets does not matter

Depreciable property is property that is used to generate income (clause 1 of Article 256 of the Tax Code of the Russian Federation), the actual use of fixed assets matters

State registration of property rights does not affect the acceptance of fixed assets for accounting:

see PBU 6/01 and clause 52 of the “Methodological guidelines for accounting of fixed assets” (approved by Order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n)

Useful life

Fixed assets are depreciated over their useful life (LPI). The organization determines it independently when accepting an object for accounting based on the following criteria (clause 20 of PBU 6/01, paragraph 2 of clause 59 of Methodological Instructions No. 91n):

1. expected period of use (depending on the productivity and capacity of the facility);
2. expected physical wear and tear (depending on the mode of use (number of shifts), the influence of natural conditions and aggressive environment, the system of repair work, etc.);
3. other restrictions on use (regulatory, contractual, etc.).

The above procedure for determining the useful life also applies to used objects (paragraph 2, paragraph 59 of Methodological Instructions No. 91n).

Reference. Organizations received the opportunity to independently set their useful life after PBU 6/97 came into force on January 1, 1998. Until this point, the cost of fixed assets was repaid during the standard (in relation to machinery, equipment and vehicles) or actual service life (in relation to other funds).

However, most organizations, in order to determine SPI in accounting, use the tax Classification of fixed assets included in depreciation groups (hereinafter referred to as the Classification of Fixed Assets). This possibility is provided for in clause 1 of the Decree of the Government of the Russian Federation dated January 1, 2002 No. 1. This is done in order to bring together accounting and tax accounting data.

The choice of a specific procedure for determining the useful life must be recorded in the accounting policy of the organization for accounting purposes (clause 7 of PBU 1/2008).

Once the SPI of a fixed asset has been established, it is not subject to revision, except in cases where, as a result of restoration work, the initially adopted standard indicators of the object’s functioning are improved (increased). Such cases include (paragraph 6, paragraph 20 of PBU 6/01, paragraph 1, paragraph 60 of Guidelines No. 91n):

1. reconstruction;
2. modernization;
3. completion;
4. retrofitting

Notice! In accordance with paragraph 20 of PBU 6/01, the organization must review the useful life of the modernized (reconstructed) facility, but whether to change it or not remains its decision. This is the right of the organization.

According to clause 21 of PBU 6/01, the organization begins to depreciate fixed assets from the 1st day of the month following the month of its acceptance for accounting. This rule also applies to real estate, the ownership of which is subject to mandatory state registration. As follows from paragraph 52 of Methodological Instructions No. 91n, if the initial cost of real estate is formed, it must be accepted for accounting as a fixed asset. In this case, the organization does not have to wait until it submits the necessary documents to the registration authority to legitimize its rights to the object.

Depreciation on a fixed asset is not suspended throughout its useful life. But there are two exceptions to this rule (clause 23 of PBU 6/01):

— transfer of the object to conservation for a period of more than 3 months by decision of the manager; — restoration (reconstruction, modernization) of the facility for a period of more than 12 months.

In all other cases (repairs, seasonal nature of work), depreciation on a fixed asset must be accrued regularly, regardless of the fact of its use in the organization’s activities.

The organization stops depreciating fixed assets from the 1st day of the month following the month of full repayment of its cost or writing off the asset from accounting (clause 22 of PBU 6/01).

Methods for calculating depreciation

The norm of clause 18 of PBU 6/01 provides for 4 methods of calculating depreciation for accounting purposes :

1. linear method;
2. reducing balance method;
3. method of writing off value by the sum of the numbers of years of useful life;
4. a method of writing off cost in proportion to the volume of products produced.

The organization's accounting policy for accounting purposes establishes the method of calculating depreciation in relation to fixed assets (or groups of similar objects). At the same time, paragraph 18 of PBU 6/01 states that the method of calculating depreciation established for a group of homogeneous objects is applied throughout the entire useful life of these objects, that is, for homogeneous fixed assets already in use, the method of calculating depreciation is not subject to change. However, neither PBU 6/01 nor Guidelines No. 91n contain a definition of the concept of groups of homogeneous objects and the principles of their formation.

Some organizations take as a basis the grouping of property objects according to the OS Classification. However, this distribution option is not correct enough, since it does not meet the principle of homogeneity of fixed assets.

Officials of the financial department, in their letters dated January 12, 2006 No. 07-05-06/2, dated February 1, 2006 No. 07-05-06/20, advise forming groups of homogeneous objects based on the characteristics of the purpose of these objects. So, when grouping homogeneous objects, an organization can be guided by clause 44 of Methodological Instructions No. 91n, where groups such as buildings, structures, vehicles, etc. are given as an example. Provisions for the formation of groups of homogeneous objects must be prescribed in the accounting policy.

According to paragraph 8 and paragraph 9 of PBU 1/2008, accounting methods, including methods for calculating depreciation on fixed assets, are subject to application from January 1 of the year following the year of approval of the relevant organizational and administrative document (order , orders, etc.).

Regardless of which method of calculating depreciation the organization has chosen, during the reporting year it must charge monthly depreciation charges in the amount of 1/12 of the annual amount for each fixed asset item (clause 19 of PBU 6/01). In this case, the annual amount is calculated according to a certain formula depending on the method of calculating depreciation. This rule also applies to fixed assets that are used by organizations seasonally due to the nature of production. (The exception is the write-off method in proportion to the volume of output, where the monthly depreciation rate is calculated using a given formula.)

If an item of fixed assets is accepted for accounting during the reporting year, then the annual amount of depreciation is the amount determined from the first day of the month following the month of acceptance of this item for accounting until the reporting date of the annual financial statements (clause 55 of the Guidelines No. 91n).

Linear method of calculating depreciation

The linear method is the main and most used. The annual amount of depreciation is determined based on the initial (replacement - in case of revaluation) cost of the fixed asset and the depreciation rate, which is calculated based on the useful life (clause 19 of PBU 6/01, clause 54 of Methodological Instructions No. 91n).

The procedure for calculating depreciation charges:

1. At = 100%: Sleep,
2. Agod = Ps x Na,
3. Ames = Agod: 12,

Where:

• Agod – annual amount of depreciation;
• Ames – monthly depreciation amount;
• Ps – initial (replacement) cost of the fixed asset;
• Na is the depreciation rate;
• SP is the useful life of a fixed asset.

The graphs below show the dynamics of the annual amount of depreciation, residual value and depreciation fund (accumulated depreciation), provided that the fixed asset is depreciated in a linear manner.

Fig.1. Graphs for the straight-line depreciation method: (1) annual depreciation; (2) residual value; (3) sinking fund

Example 1.

LLC "Kantselyariya" purchased a warehouse for finished products. The initial cost of the fixed asset was RUB 3,000,000. By decision of the manager, the useful life of the facility was set at 25 years. In accordance with the Company's accounting policy, for accounting purposes, depreciation on all fixed assets is calculated using the straight-line method.

Solution.

Calculation of depreciation charges:

1. Depreciation rate(Na): 4% (= 100%: 25 years);
2. Annual depreciation amount (Agod): RUB 120,000. (= RUB 3,000,000 x 4%);
3. Monthly depreciation amount (Ames): RUB 10,000. (= RUB 120,000: 12 months).

End of example

Reducing balance method

If the efficiency of use of fixed assets decreases every year, then the organization has the right to use the reducing balance method . However, it is worth considering how the use of this method will affect the amount of property tax and the cost of manufactured products (work performed, services provided).

The annual amount of depreciation is determined based on the residual value of the fixed asset and the depreciation rate, which is calculated on the basis of its useful life, as well as an acceleration factor not exceeding 3 (clause 19 of PBU 6/01). The specific value of the coefficient is established by the organization. The decision must be fixed in the accounting policy for accounting purposes.

According to the norm of paragraph 54 of Methodological Instructions No. 91n, the following acceleration coefficients can be used:

— coefficient 2 – small businesses; - coefficient 3 (in accordance with the terms of the agreement) - in relation to movable property that is the object of financial leasing and related to the active part of fixed assets.

Here the question arises: is it possible to use accelerated depreciation in relation to any fixed assets depreciated using the reducing balance method, guided by clause 19 of PBU 6/01?

The courts note (Resolution of the Supreme Arbitration Court of the Russian Federation dated 07/05/2011 No. 2346/11, Resolution of the FAS ZSO dated 06/03/2014 No. A27-8854/2013) that the regulations of PBU 6/01 and Guidelines No. 91n must be applied in conjunction . Therefore, organizations do not have the right to arbitrarily set an acceleration factor for any fixed assets and must take into account the conditions under which the right to apply accelerated depreciation arises.

The procedure for calculating depreciation charges:

1. At = 100%: Sleep,
2. Agod = Os x Na x Kusk,
3. Ames = Agod. : 12,

Where:

• Agod is the annual amount of depreciation,
• Ames – monthly depreciation amount,
• OS – residual value of the fixed asset at the beginning of the reporting year;
• Na is the depreciation rate;
• Spi – useful life of a fixed asset;
• Kusk is the acceleration coefficient.

Below is a graphical representation of the dynamics of the annual amount of depreciation, residual value and depreciation fund (accumulated depreciation) in the case of depreciation of fixed assets using the reducing balance method.

Fig.2. Schedules for the reducing balance method: (1) annual depreciation; (2) residual value; (3) sinking fund

Example 2.

JSC TD Karton purchased an electric forklift. Its initial cost was 300,000 rubles. Useful life – 5 years. In accordance with the accounting policy of JSC TD Karton, for accounting purposes, this group of fixed assets is depreciated using the reducing balance method.

Solution.

Calculation of depreciation rate:

1. Depreciation rate (Na): 20% (100%: 5 years).

The calculation of annual (Agod) and monthly (Ames) depreciation amounts is presented in the table below.

As can be seen from the calculation table, part of the cost of the fixed asset (98,304 rubles or 32.77%) after the expiration of its useful life remained under-depreciated. RUB 201,696 was transferred to expenses. or 67.23%. But clause 22 of PBU 6/01 stipulates that depreciation should be accrued until the cost of the fixed asset is fully repaid (or written off from accounting), and the regulatory documents do not say what to do with the under-depreciated value of the property.

In this situation, one should be guided by the norm of paragraph 7 of PBU 1/2008, which states: if on a specific issue the regulations do not establish methods of accounting, then the organization itself develops appropriate methods when forming accounting policies, based on PBU 1/2008, other provisions in accounting, as well as IFRS.

Consequently, when using the reducing balance method for calculating depreciation, the organization determines the procedure for writing off the outstanding value of a fixed asset after the end of its useful life and establishes it in its accounting policy. There may be several options for example here. To demonstrate their implementation in practice, we will use the data from Example 2.

Option 1. In the last month of the useful life of a fixed asset, depreciation is charged in an amount equal to the residual value of the object as of this date. In our case, depreciation for the last 5th year of the useful life of a fixed asset item - an electric forklift - will be accrued in the following amounts:

1. monthly for 11 months: • Calculation : 24,576 rub. : 12 months = 2,048 rub.

2. in the last month: • Calculation : 2,048 rub. + 98,304 rub. = 100,352 rub.

Option 2. The residual value of the fixed asset at the beginning of the last year of its useful life is written off evenly over 12 months. In our case, the amount of monthly depreciation charges for the last 5th year of the useful life of a fixed asset item - an electric forklift - will be:

• RUB 122,880 : 12 months = 10,240 rub.

End of example

Method of writing off cost based on the sum of the numbers of years of useful life

When calculating depreciation based on the sum of the numbers of years of the useful life, the annual amount of depreciation charges is calculated based on the initial (replacement - in case of revaluation) cost and the ratio of the number of years until the end of the useful life (in the numerator) and the sum of the numbers of years of the useful life (in the denominator ).

The procedure for calculating depreciation charges:

1. Agod = Ps x (CHLSpi / SCHLSpi),
2. Ames = Agod: 12,

Where:

• Agod – annual amount of depreciation;
• Ames – monthly depreciation amount;
• Ps – initial (replacement) cost of the fixed asset;
• CHLSpi – number of years of useful life;
• SCHLSpi is the sum of the numbers of years of useful life.

The graph clearly shows the dynamics of the annual amount of depreciation, residual value and depreciation fund (accumulated depreciation) when writing off the cost of a fixed asset by the sum of the numbers of years of its useful life.

Fig.3. Graphs for the method of writing off value by the sum of the numbers of years of useful life: (1) annual depreciation; (2) residual value; (3) sinking fund

Example 3.

StroyDor LLC purchased a rooter. The initial cost of the car was 600,000 rubles. The manager's decision established a useful life of 5 years. The accounting policy of the organization for accounting purposes establishes that the cost of fixed assets of this group is written off using the method based on the sum of the numbers of years of useful life.

Solution.

1. The sum of the numbers of years of useful life (SSLsp) is equal to 15 (= 1+2+3+4+5).

The calculation of depreciation charges (annual and monthly amounts) is presented in the table below.

End of example

Method of writing off cost in proportion to the volume of products produced

The write-off method in proportion to the volume of products (works) is used quite rarely and mainly in cases where the acquired fixed asset is designed to perform a certain, limited amount of work over the entire useful life of the object.

This method is based not on the useful life, but on the volume of products (work) that is expected to be produced (performed) through the use of a fixed asset.

The amount of depreciation is calculated monthly as the product of the actual volume of output (work performed) in the reporting period (given month) in natural values ​​and the ratio of the initial cost of the fixed asset and the estimated volume of output (work performed) for the entire period of use of the facility.

The procedure for calculating depreciation charges:

1. Ames = OVf x (Ps / OVp),

Where:

• Ames – monthly depreciation amount;
• Ps is the initial cost of the fixed asset;
• OVf – actual volume of production (work) in the reporting month;
• ORP – the estimated volume of production (work) for the entire period of use of the fixed asset.

Example 4.

purchased a machine for the production of hardware for 600,000 rubles. The passport for this machine states that it is designed to produce 300,000 parts. In accordance with the Company's accounting policy, for accounting purposes, depreciation on this equipment should be accrued in proportion to the volume of production. Using a facility for production beyond the established volume leads to a decrease in the quality of the products and the impossibility of using them for their intended purpose.

The organization began using the machine and released:

• 1st month - 5,000 parts;
• 2nd month - 4,000 parts;
• 3rd month - 6,000 parts;
• 4th month - 5,000 parts;
• 5th month - 3,000 parts;
• etc.

Solution.

The table shows the calculation of depreciation charges for the machine.

The organization will depreciate the machine until its cost is paid off.

End of example

About the Unified Standards of Depreciation Charges

The balance sheet of some organizations may still include fixed assets that were put into operation before 01/01/1998. What is this date associated with?

The fact is that on January 1, 1998, a new accounting regulation “Accounting for fixed assets” PBU 6/97 came into force (approved by Order of the Ministry of Finance of Russia dated September 3, 1997 No. 65n). This document established 4 new methods of calculating depreciation, which should be applied to newly introduced fixed assets (These methods are described above and are currently used in accordance with clause 18 of PBU 6/01).

The same assets that began to be used before the end of 1997 and earlier continue to be depreciated according to the old procedure during the standard (or actual) life of their service according to the Unified standards of depreciation charges for the complete restoration of fixed assets of the national economy (approved by the Resolution of the Council of Ministers of the USSR dated October 22, 1990 No. 1072).

From nonlinear to linear

An “analog” of the reducing balance method in tax accounting can, with certain reservations, be called the non-linear method of calculating depreciation. However, when using it, the depreciation rate for each group is clearly established (Article 259.2 of the Tax Code of the Russian Federation).

Example 3. In the conditions of example 1, assume that the organization has established a non-linear method in tax accounting and does not have other fixed assets belonging to the third depreciation group (see Table 2).

Calculation of depreciation using the non-linear method for 2014 for fixed assets of the third group*

Further, the procedure for calculating depreciation will be the same.

If the organization does not acquire other operating systems of the third group by September 2021, the total balance of this group will become less than 20,000 rubles. In this case, clause 11 of Art. 259.2 of the Tax Code of the Russian Federation allows the entire total balance to be allocated to non-operating expenses, and the depreciation group to be liquidated.

But suppose that an organization that has been using the non-linear method since 2009 decides to return to the linear depreciation method in 2015. What to do in this case is written in paragraph 4 of Art. 322 of the Tax Code of the Russian Federation. First of all, you need to calculate the residual value of each fixed asset as of January 1, 2015. In our case, the residual value of the only fixed asset from the third group coincides with the total balance of the group as of January 1, 2015 - 60,540.67 rubles.

Next, we determine the remaining useful life. The OS was used for 7 months, so the remaining useful life is 41 months (48 - 7). Straight-line depreciation is calculated based on two previously determined indicators. That is, the depreciation rate will be (1/41) × 100% = 2.44%, and the monthly depreciation amount in tax accounting will be 1,476.60 rubles (60,540.67 × 0.0244).

Which depreciation method to choose?

Fixed assets wear out and are not renewed at the same time. This is a gradual process. But some objects will depreciate faster, some slower - this depends on the depreciation policy of the enterprise, one of the main tasks of which is to select the optimal methods for calculating depreciation for both accounting and tax accounting purposes. In this case, what should be guided in solving the problem?

For example, in Western countries, when choosing one or another method of calculating depreciation, organizations are guided by the principle of matching income and costs. The point is this.

If, as a result of using an item of fixed assets throughout the SPI, the company receives uniform income, then preference is given to the linear method.

If the income from the operation of property is greater at the beginning of its useful life, and closer to its end, repair costs increase, then it is better to use accelerated depreciation methods (the reducing balance method, the method of writing off the cost by the sum of the numbers of years of the useful life). When calculating depreciation using these methods, most of the cost of fixed assets is transferred to the cost of products (works, services) in the first years of their operation.

When an organization's income depends on the actual output of products, it is more advisable to choose a method of writing off the cost in proportion to the volume of products produced. This method is the most accurate in terms of matching income and expenses. If the volume of output increases, then the organization's expenses for depreciation of property increase. When production volumes fall, depreciation amounts decrease accordingly. When equipment is idle, depreciation does not need to be charged at all. A significant disadvantage of this method is its labor intensity.

Russian practice shows that most domestic organizations in their choice are aimed at bringing accounting and tax accounting closer together, therefore, usually all fixed assets are depreciated using the straight-line method.

Accounting for accrued depreciation

To summarize information about accrued depreciation, passive account 02 “Depreciation of fixed assets” is used. In the credit of account 02, in correspondence with the accounts for recording production costs (selling expenses), the amount of accrued depreciation charges is reflected. In this case, the following entries are made in accounting:

Debit 20 (23, 25, 44) – Credit 02 – reflects depreciation on fixed assets that are used in the production of products, when performing work and providing services.

If an organization (not a construction organization) makes capital investments (construction, modernization, reconstruction) using fixed assets, then it will make the following entry in accounting:

Debit 08.3 – Credit 02 – reflects depreciation on fixed assets that are involved in capital work.

If the fixed asset is used in service industries and farms, then the accrued depreciation is reflected as follows:

Debit 29 – Credit 02 – reflects the accrual of depreciation on fixed assets employed in service industries and farms.

Accrued depreciation on fixed assets that are used for management needs (i.e. not related to the main production process) is charged to account 26:

Debit 26 – Credit 02 – reflects depreciation on fixed assets that are used for management purposes.

Analytical accounting for account 02 is carried out for inventory items.

Example 5.

The organization Fuel Systems LLC purchased a computer for an IT department employee in December. Its initial cost was 53,100 rubles, including VAT (18%) – 8,100 rubles. In the same month, the facility was put into operation as a fixed asset. Based on the Company's accounting policy, for accounting purposes, the useful life of the computer was established in accordance with the Classification of fixed assets with a duration of 2.5 years (2nd depreciation group); The method of calculating depreciation is linear.

Solution.

The accountant at Fuel Systems LLC will reflect the receipt of the computer with the following entries.

In accounting, the organization will begin to depreciate the object in January (clause 21 of PBU 6/01). Calculation of depreciation charges by computer:

1. On = 100% : Sleep = 100% : 2.5 g = 40%,
2. Agod = Ps x Na = 45,000 rub. x 40% = 18,000 rub.,
3. Ames = Agod: 12 months. = 18,000 rub. : 12 months = 1,500 rub.

End of example

Fixed assets that cannot be depreciated

So, the following types of depreciable property are not subject to depreciation:

• valuable objects of budgetary organizations, except for those acquired in connection with entrepreneurial work activities;
• property of non-profit institutions (NI), which was received in the form of targeted revenues, or was acquired at the expense of funds from basic revenues and is used for the purposes of non-profit activities.

In addition, the following types of depreciable property are not subject to depreciation:

• items created or purchased using budget money from targeted funding;
• external improvement facilities;
• purchased publications and works of art, the price of publications is taken into account as part of other various expenses that are associated with sales and production, in the amount of the entire cost at the time of purchase;
• property that was created or purchased using funds received free of charge;
• received rights to products of intellectual activity, as well as other things of such property in cases where, according to the agreement for receipt, payment is made periodically in the form of payments within the term of the agreement.

Fixed assets that are not subject to depreciation are excluded from the property because:

• were received or transferred under agreements for free use;
• were transferred to conservation for a duration of more than three months;
• have been undergoing modernization and reconstruction for more than twelve months;
• turned out to be registered in the Russian international list of ships at the time of their presence in this database. As part of the re-mothballing of fixed assets, depreciation for such items can be accrued in the manner that was in effect before the relevant process. In this case, the useful life of the object itself is, as a rule, extended by the period of time it is in conservation.