Whether the amortization of land use rights for self built factories should be included in fixed ass

China's enterprises and individuals have the right to use land, not ownership, because the ownership of land belongs to the state and collectives.

Therefore, in China, the acquisition of land is the acquisition of the right to use, which should be recorded as intangible assets, and intangible assets should be amortized without depreciation.

The amortization of the value of intangible assets is amortized according to the life of the land use rights you have obtained, and the method of amortization is generally a straight-line method, that is: the value of intangible assets amortized annually = the value of land use rights obtained (the recorded value of intangible assets) and the service life.

The following entries are made when the amortization is recorded:

Borrow: Administrative expenses.

Credit: Accumulated amortization.

Although you use it to build a factory, the land use right is still an intangible asset, not a fixed asset, so it cannot be transferred to the fixed asset, and the value of the remaining intangible assets must still be amortized according to the above method until the amortization is exhausted.

The amortization amount of land use rights during the construction period is included in the construction in progress, and after the completion of the construction in progress, it is carried forward to the fixed assets.

Small Business Accounting Standards.

For the self-development and construction of factories and other buildings, the relevant land use rights and buildings shall be handled separately. The price paid for the purchased land and buildings shall be distributed between the buildings and the land use rights in a reasonable manner; If it is difficult to reasonably distribute, all of them shall be treated as fixed assets.

Except for real estate development enterprises, the land use rights purchased by other enterprises are recorded separately, recorded in the "intangible assets" account, and amortized in a straight line according to the term specified in the contract. At the beginning of the construction period, the real estate enterprise shall allocate the value of the land to the development cost in accordance with the prescribed method and proportion.

According to Article 17 of Standard No. 6, the amortization amount of intangible assets should generally be included in profit or loss for the current period, unless otherwise specified in other accounting standards. Since the acquisition of land use rights by the Hesheng Barrage Method is the basic premise for engaging in construction activities, the amortization of land use rights during this period is also the necessary and reasonable expenditure necessary for the relevant buildings to reach the intended usable state.

Therefore, during the construction period of the relevant housing building, the amortization of the land use right occupied by the mu slip can be included in the construction cost of the housing building. The amortization amount of the building after it reaches the intended state of use shall be included in the profit or loss for the current period.

How to amortize the land use rights of the Jianjikai plant:

1. The purchased land use right is regarded as an intangible asset.

Separate accounting, amortization as required.

2. Enterprises build fixed assets such as factories and office buildings for their own use on the purchased land.

During the capitalization period, the cumulative amortization of the corresponding land use rights shall be included in the recorded value of the construction of fixed assets, that is, included in the "construction in progress", and the capitalization shall cease after completion, and the land use rights shall still be accounted for as intangible assets, and the accumulated amortization shall generally be included in the management expenses. Village.

Accounting treatment of land use rights obtained by enterprisesThe land use rights obtained by enterprises shall generally be recognized as intangible assets according to the price paid at the time of acquisition and the relevant taxes and fees. When the land use right is used for self-development and construction of above-ground buildings such as factories, the carrying amount of the land use right is not combined with the above-ground buildings to calculate its cost, but is still accounted for as an intangible asset.

If the land use right obtained by the real estate development enterprise is used to construct the external housing building, the value of the relevant land use right shall be included in the cost of the housing and building constructed.

If the price paid by the enterprise for the purchase of buildings includes the land use right and the value of the building, the actual price paid shall be distributed between the land use right and the above-ground building in a reasonable way; If it is indeed impossible to make a reasonable distribution between the land use right and the above-ground buildings, all of them shall be treated as fixed assets and handled in accordance with the principle of recognition and measurement of fixed assets.

The amortization amount during the construction period of land use rights shall generally be included in the profit or loss for the current period, calculated as a part of the management expenses, and carried forward to the fixed assets after the completion of the construction in progress. The purchased land use rights shall be accounted for separately as intangible assets and shall be amortized as required.

Accounting Standards for Business Enterprises No. 6 - Intangible Assets Article 17 The amortization amount of intangible assets with a limited useful life shall be systematically and reasonably amortized during the useful life. The amortization of intangible assets by an enterprise shall start when the intangible assets are available for use and end when they are no longer recognized as intangible assets. The amortization method of intangible assets chosen by the enterprise should reflect the expected realization of the economic benefits related to the intangible assets.

If the expected realization method cannot be reliably determined, the straight-line method of amortization shall be adopted. The amortization amount of intangible assets shall generally be included in profit or loss for the current period, unless otherwise provided by other accounting standards.

Legal analysis: Amortization refers to the accounting treatment of the acquisition cost of other operating assets that can be used for a long time according to their useful life, which is similar to the depreciation of fixed assets. Amortization expense was included in administrative expenses to reduce current profit, but had no impact on operating cash flow.

Legal basis: Article 67 The amortization period of intangible assets shall not be less than 10 years, but as an intangible asset for investment or transfer, if the relevant laws and regulations or the contract stipulate the service life, it may be amortized in installments in accordance with the provisions or agreed service life.

Whether the intangible assets used for self-built factories are amortized when an enterprise purchases this land and obtains a land certificate shall be determined based on the actual situation and in conjunction with the relevant accounting standards.

According to Article 63 of Chapter 6 of the Accounting Standards, the intangible assets purchased by an enterprise shall be reasonably valued at the time of purchase, the expenditure shall be determined by the amount of the asset, and the increase of the asset shall be determined by the same amount, and amortized in accordance with the relevant provisions of the accounting standards.

Therefore, according to the above provisions, the intangible assets purchased and obtained by obtaining land certificates for self-built factories should be amortized in accordance with the relevant provisions of accounting standards after reasonable valuation, so as to ensure the true and accurate book value of the assets, as well as the timely and accurate reflection of the financial status of the enterprise.