Are there any benefits to accelerated depreciation of fixed assets? Can you elaborate on that?

Strengthening the accelerated depreciation method of fixed assets in combination with the benefits of accelerated depreciation not only has its own importance and necessity, but also has very important significance. It is mainly manifested in the following three aspects:

1) Accelerated depreciation of fixed assets can realize full compensation of fixed assets. According to Marx's theory of cost compensation, the value of fixed assets recovered each time should be consistent with physical wear and tear, basically achieving the role of renewal and compensation. China's current average life method has not been able to fully compensate for depreciation funds.

Even in the absence of inflation, the continued use of obsolete equipment will affect product upgrading and market competitiveness due to backward production processes and high energy consumption. Accelerated depreciation can compensate for this shortfall and provide timely access to funds to renew equipment.

2) Accelerated depreciation of fixed assets can prompt enterprises to update equipment and promote social progress. In the era of rapid changes in science and technology, most of the machinery and equipment need to be continuously updated due to industrial progress. If the enterprise adopts the accelerated depreciation method, the asset cost can be allocated as soon as possible, and the loss caused by the early elimination and replacement of machinery and equipment can be reduced, which not only compensates for the wear and tear of fixed assets, but also realizes the accumulation effect proposed by Marx.

3) The accelerated depreciation of fixed assets conforms to the principle of matching income and expenses. Generally, the efficiency of the services provided in the early stage of fixed assets is higher than that of the services provided in the later stage, and the burden of depreciation expenses should be higher. In addition, there are objective reasons such as spare parts and parts in the later stage, and the burden of depreciation expenses should be lower.

According to the principle of matching income and expenses, accelerated depreciation can balance the annual cost of fixed assets to a certain extent.

In general, the accelerated depreciation of fixed assets has no impact on the total profits of enterprises, but depreciation can be included in the cost in advance, the profits in the early stage are reduced, the profits in the later period are increased, the payment of enterprise income tax is delayed, and the financial pressure is alleviated.

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First, the front. Fixed asset.

Accelerated depreciation method.

There are two kinds, namely:

1. Double declining balance method;

2. Sum of years method.

The sum of years method, also known as the total life method, refers to a method of calculating the annual depreciation amount by multiplying the net amount of the original price of a fixed asset by deducting the estimated net residual value by a fraction of the remaining useful life of the fixed asset at the beginning of each year as the numerator and the sum of the expected service life as the denominator.

2. Analyze the details.

Annual depreciation rate. Remaining service life The sum of the number of years of the estimated service life * 100%.

Sum of years of expected useful life = n*(n+1) 2

Monthly depreciation rate = annual depreciation rate of 12

Monthly depreciation amount = (original price of fixed assets - estimated net residual value) * monthly depreciation rate.

3. What is accelerated depreciation of fixed assets?

Accelerated depreciation of fixed assets means that the enterprise can amortize more depreciation at the beginning of use, and this part of the depreciation can be deducted before tax.

The more deductions, the less profits, and the less taxes to pay. This preferential treatment can alleviate the financial pressure of enterprises, encourage enterprises to invest in research and development, accelerate equipment renewal, and promote the transformation and upgrading of the manufacturing industry.

The current corporate income tax law.

Its implementation regulations stipulate that due to technological progress, the rapid upgrading of products, as well as the perennial strong vibration, high corrosion state of Qingtong fixed assets can be accelerated depreciation. This regulation has no industry restrictions and covers all industry enterprises, including manufacturing.

1. This method can really consider the intangible wear and tear factors of fixed assets.

2. It can promote enterprises to accelerate technological progress and accelerate the recovery of fixed asset investment.

3. It is more in line with the principle of proportionality in accounting.

4. It also takes into account the balance of the use of fixed assets.

5. It can enable enterprises to obtain tax benefits.

Disadvantages of the accelerated depreciation method for fixed assets:

1. The calculation method is complex and the workload is large.

2. Violation of the consistent principles of accounting standards.

1.Impact on the income statement: the shorter the depreciation period of fixed assets, the faster the value of fixed assets is allocated to the cost, thereby reducing the recent taxable income and making the enterprise pay less income tax;

2.Impact on the Balance Sheet:

1) The accumulated depreciation is different, and the net value of fixed assets is definitely different, so that the assets of the enterprise are affected.

2) It will affect the total amount of assets, because the depreciation method is different, the amount of depreciation accrued will be different, and the accumulated depreciation account will be different as the deduction account of fixed assets. The total assets are summarized as the net fixed assets.

Extended Materials. Liability Analysis:

Objective. 1. Reveal the connotation of the balance sheet and related items.

2. Understand the changes in the financial status of the enterprise and the reasons for the changes.

3. Evaluate the degree of reflection of enterprise accounting on the business status of the enterprise.

4. Evaluate the accounting policies of the enterprise.

5. Revise the data of the balance sheet.

Content. The content of balance sheet analysis: balance sheet horizontal analysis, balance sheet vertical analysis, balance sheet item analysis.

Horizontal analysis. 1. Preparation of the balance sheet level analysis table.

The value of each item in the balance sheet of the analysis period is compared with the number of the base period (previous year or program or budget) to calculate the amount of change, the rate of change, and the degree of impact of the item on total assets, total liabilities, and total owners' equity.

2. Analysis and evaluation of changes in the balance sheet.

1) Analyze and evaluate from the perspective of investment or assets.

1. Analyze the changes in the scale of total assets, as well as the changes in various types and assets;

Balance sheet analysis.

2. Key categories and key projects that have a large range of changes or have a greater impact on total assets;

3. Analyze the rationality and efficiency of asset changes;

4. Examine the adaptability of changes in asset scale, owners' equity and total amounts, and then evaluate the stability and safety of the financial structure of the enterprise;

5. Analyze the impact of changes in accounting policies.

Theoretical basis and application method of accelerated depreciation method:

The accelerated depreciation method is a method of allocating the cost of a fixed asset in a decreasing state over its useful life. From the perspective of the expected realization of the economic benefits contained in fixed assets, the efficiency of fixed assets gradually decreases with the reduction of their service life. When the fixed assets are in a relatively new state, the efficiency is high, the actual use time is long, the operation efficiency is high, the product is high, and the maintenance cost is low, and the cash flow obtained is larger, which can provide more benefits for the enterprise; When the fixed assets are in an older state, the efficiency is low, and with the increase in the number of maintenances, the operating efficiency and product quality will be reduced, the cash flow obtained is less, and the rising costs reduce the profitability of the enterprise.

Therefore, in order to make the amount of depreciation consistent with the operation law of fixed assets, according to the requirements of the matching principle, more depreciation should be withdrawn in the early stage of use of fixed assets, and less depreciation should be withdrawn in the later stage of use, and the depreciation cost shows a decreasing trend, which is conducive to the value of fixed assets to be compensated as soon as possible. The straight-line method of depreciation is equal in each accounting period, resulting in insufficient compensation for wear and tear costs of assets, backward technical equipment, low output, high cost, and the severe reality of difficulty in physical renewal.

1. Accelerated depreciation of newly acquired fixed assets in important industries Since January 1, 2014, newly purchased fixed assets purchased by biopharmaceutical enterprises, special equipment manufacturing enterprises, railway repatriation, shipbuilding, aerospace and other transportation equipment manufacturing enterprises, computer, communication and other electronic equipment manufacturing enterprises, and information transmission, software and information technology service enterprises can accelerate depreciation, and the depreciation can be deducted before enterprise income tax by shortening the depreciation period or accelerating depreciation. Since January 1, 2015, enterprises in the light industry, textile, machinery and automobile industries can accelerate the depreciation of newly purchased fixed assets, and adopt the shortened depreciation period or accelerated depreciation method to calculate the depreciation and deduct it before enterprise income tax. 2. Newly purchased R&D equipment for small and micro enterprises in important industries For small and micro enterprises in the above-mentioned important industries, R&D equipment with a unit price of no more than 1 million yuan, which is used for both R&D and production and operation, can be deducted in full before tax at one time.

3. Accelerated depreciation of integrated circuit production equipment of integrated circuit enterprises The depreciation of the production equipment of integrated circuit enterprises can be calculated and deducted before tax on a three-year basis.

Article 32 of the Enterprise Income Tax Law stipulates that if the fixed assets of an enterprise really need to accelerate depreciation due to technological progress and other reasons, the depreciation period can be shortened or the method of accelerated depreciation can be adopted.

Hello, I am glad to answer for you The use of accelerated depreciation method can enable enterprises to recover their investment as soon as possible, update fixed assets, improve labor productivity and product quality, and thus improve the competitiveness of enterprises within the industry. This will inevitably eliminate those enterprises with low labor productivity and poor product quality. It is conducive to preventing the risk of price changes and reducing the loss of the time value of money invested in fixed assets.

At present, the economic environment in which enterprises are located is complex and changeable, and the phenomenon of price changes and inflation objectively exists. The accelerated depreciation method takes into account the time value of money, whereas the straight-line method does not take into account the time value of money. Under the condition of price changes, especially under the condition of continuous price change, the implementation of the accelerated depreciation method can recover most of the investment in advance, reduce the loss of monetary time value due to price **, realize the unification of fixed asset value compensation and in-kind compensation, and meet the requirements of the principle of accounting prudence.

It is conducive to improving the ability of self-development. The use of accelerated depreciation method can make the cost of fixed assets be compensated faster during the service period, and the enterprise has less profits and less taxes in the early stage, and more profits and more taxes in the later stage, so as to play the role of deferring tax payments and enhancing the stamina of enterprise development, but the total amount of enterprise income tax payable remains unchanged. From a long-term perspective, the accelerated depreciation method will not reduce the total amount of enterprise income tax payable by enterprises, and enterprises will increase labor productivity and profitability by rapidly carrying out technological transformation of fixed assets, thereby increasing state fiscal revenue. 

The depreciation methods of fixed assets generally include the straight-line method, the double declining balance method, the total number of years method, etc., and what are the applicable situations for the accelerated depreciation of fixed assets?

What are the circumstances under which fixed assets can be depreciated at an accelerated rate?

According to the notice of the Ministry of Finance and the State Administration of Taxation on improving the enterprise income tax policy for accelerated depreciation of fixed assets (CS 2015 No. 106).

1. For the newly purchased fixed assets purchased after January 1, 2015 by enterprises in key industries in four fields such as light industry, textile, machinery, and automobile (see the annex for specific scope), the enterprise can choose to shorten the depreciation period or adopt the method of accelerated depreciation.

2. For the instruments and equipment newly purchased by small and low-profit enterprises in the above-mentioned industries after January 1, 2015, the unit value does not exceed 1 million yuan, which is allowed to be included in the current cost and expense at one time and deducted in the calculation of taxable income, and depreciation will no longer be calculated by year; If the unit value exceeds 1 million yuan, the enterprise can choose to shorten the depreciation period or adopt the method of accelerated depreciation.

3. If the enterprise shortens the depreciation period in accordance with the provisions of the first round of difficulties and Article 2 of this notice, the minimum depreciation period shall not be less than 60% of the depreciation period stipulated in Article 60 of the Regulations for the Implementation of the Enterprise Income Tax Law; If the accelerated depreciation method is adopted, the double declining balance method or the sum of years method can be adopted.

In accordance with the relevant provisions of the Enterprise Income Tax Law and its implementing regulations, enterprises can also choose not to implement the accelerated depreciation policy according to their own production and operation needs.

According to Article 32 of the Enterprise Income Tax Law of the People's Republic of China, if the depreciation of fixed assets of an enterprise is really necessary to accelerate due to technological progress and other reasons, the depreciation period can be shortened or the method of accelerated depreciation can be adopted.

According to Article 1 of the Notice of the State Administration of Taxation on Issues Concerning the Treatment of Income Tax on Accelerated Depreciation of Fixed Assets of Enterprises (Guo Shui Fa [2009] No. 81), according to Article 32 of the Enterprise Income Tax Law and Article 98 of the Implementation Regulations, if the main or key fixed assets owned by an enterprise and used for production and operation really need to accelerate depreciation due to the following reasons, the depreciation period can be shortened or the method of accelerated depreciation can be adopted:

1) Due to technological progress, the product is updated quickly;

2) Perennial in a state of strong vibration and high corrosion.

What is Depreciation of Fixed Assets?

Depreciation of fixed assets refers to the systematic apportionment of the accrued depreciation amount according to the determined method during the useful life of the fixed assets. The accrued depreciation amount refers to the amount of the original price of the fixed assets that should be depreciated after deducting its estimated net value, and the accumulated amount of the impairment provision for fixed assets for which impairment provisions have been accrued should also be deducted.

Accounting entries for depreciation of fixed assets.

Debit: Manufacturing expenses (depreciation of fixed assets used in production).

Administrative expenses (depreciation of fixed assets for administrative purposes).

Selling expense (depreciation of fixed assets used by the sales department).

Credit: Accumulated depreciation.