The difference between amortization of working materials and amortization of low value consumables

There are three methods of amortization of working materials: the one-time amortization method, the five-five amortization method and the amortization method.

1. Definition of turnover materials.

Turnover materials refer to the materials that can be used by the enterprise many times and gradually transfer their value but still maintain their original form and are not recognized as fixed assets, which are used to calculate the planned cost or actual cost of the turnover materials of the enterprise, including packaging, low-value consumables, and steel formwork, wood formwork, scaffolding, etc. of the enterprise (construction contractor). The packaging materials and low-value consumables of the enterprise can also be set up separately for "packaging materials" and "low-value consumables". Hint:

Whether the material is a low-value consumable is divided according to its nature, and there is no direct relationship with the value and value. Turnover materials can be accounted for in detail according to their types, "in stock", "in use" and "amortization".

Second, the main accounting treatment of turnover materials.

1) The turnover materials purchased, self-made, and entrusted to external units to be processed and inspected in the warehouse shall be handled in accordance with the relevant provisions of the "raw materials" subject.

2) If the one-time resale method is adopted, the "management expenses", "production costs", "sales expenses", "engineering construction" and other accounts shall be debited and credited to this account according to their book value. When the turnover material is scrapped, the "raw material" and other accounts should be debited and the "management expenses", "production costs", "sales expenses", "engineering construction" and other accounts should be credited according to the residual value of the scrapped turnover materials.

3) If other amortization methods are adopted, this account (in use) and this account (in the library) shall be debited and credited (in the library) according to its book value; When amortizing, the accounts of "management expenses", "production costs", "sales expenses" and "engineering construction" shall be debited according to the amortization amount, and this account (amortization) shall be credited. When the turnover material is scrapped, the amortization amount shall be supplemented, and the accounts of "management expenses", "production costs", "sales expenses" and "engineering construction" shall be debited and this account (amortization) shall be credited; At the same time, according to the residual value of scrapped turnover materials, "raw materials" and other accounts are debited, and "management expenses", "production costs", "sales expenses", "engineering construction" and other accounts are credited; and resell all the amortized amounts, debit this account (amortization), and credit this account (in use).

4) If the turnover materials are used for daily accounting at the planned cost, the cost difference that should be apportioned should also be carried forward when the turnover materials are issued.

3. The significance of the closing balance.

The debit balance at the end of this account reflects the planned or actual cost of the company's turnover materials in the warehouse and the amortized value of the turnover materials in use.

The amortization method is the same.

According to the regulations of the Accounting Department of the Ministry of Finance, enterprises should use the one-time resale method or the five-five amortization method to amortize low-value consumables and packaging materials, and include them in the cost of relevant assets or current profit and loss. This is a method of simple accounting.

Legal basis: Article 20 of the Accounting Standards for Business Enterprises No. 1 - Inventory An enterprise shall adopt the one-time resale method or the five-five amortization method to amortize the low-value consumables and packaging materials for late burial, and include them in the cost of relevant assets or current profit or loss.

Recording and amortization of low-value consumables:(1) At the time of purchase (assuming that a special VAT invoice is obtained):

Borrow: Turnover materials – low-value consumables.

Tax Payable – VAT payable (input tax).

Credit: bank deposits, etc.

2) When receiving:

Borrow: Turnover materials – low-value consumables – in use.

Credit: Turnover materials - low-value consumables - in stock.

3) Amortization of half of its value at the time of first receipt:

Borrow: manufacturing costs.

Credit: Turnover Materials – Low-Value Consumables – Amortization.

4) Amortization of half of its value at the second use:

Borrow: manufacturing costs.

Credit: Turnover Materials – Low-Value Consumables – Amortization.

At the same time: borrow: turnover materials - low-value consumables - amortization.

Credit: Turnover materials – low-value consumables – in use.

Amortization method for low-value consumables:1. One-time amortization method. The one-time amortization method refers to the method of including the full value of low-value consumables in the relevant costs at one time when receiving them.

2. Five-five amortization method. The five-five amortization method refers to an amortization method that amortizes half of the book value of low-value consumables when they are used, amortizes the other half of their book value when they are scrapped, and writes off the total cost.

1. One-time amortization method.

Does the one-time amortization method refer to the use of low-value consumables? Transfer its entire value at once"Administrative expense – the amortization method for the amortization account for low-value consumables. For lower value? Short service life? Pick up a small number of items at a time.

1.At the time of receiving.

Borrow: Low-value consumables – in use.

Borrow; Low-value consumables are in stock.

Borrow: management fees are used early - low-value consumable amortization.

Credit: Low-value consumables – in use.

2.At the end of life? The scrapped scrap value is reduced as amortization of low-value consumables. Offset administrative expenses.

Borrow: Cash. Credit: Administrative expenses – amortization of low-value consumables.

2. Amortization method.

Does it mean that when low-value consumables are used, according to the estimated use time? An amortization method that amortizes the average value into the expense in installments. This amortization method is more balanced and suitable for higher unit value?

The item with a long service life is missing. The amortization method is adopted, and in accounting, the actual cost of low-value consumables is transferred to all of them when they are collected"Expenses to be amortized" account? Later installments from"Expenses to be amortized are transferred to the Administrative Expenses - Amortization of Low-Value Consumables account.

At the time of receiving. Borrow: Low-value consumables – in use.

Credit: Low-value consumables – in stock.

Borrow: Amortized expenses - amortization of low-value consumables.

Credit: Low-value consumables – in use.

The amortization entries are as follows:

Borrow: Administrative expenses - amortization of low-value consumables.

Credit: Amortization expense – amortization of low-value consumables.

When scrapping, the amortized value is deducted from the amount of residual materials as the amortization amount of scrapped low-value consumables.

Borrow: material material (residual material value).

Administrative Expenses Amortization (difference) of low-value consumables

Credit: Expenses to be amortized (amortized value).

Three, five five amortization method.

The five-five amortization method is the five-percent amortization method, which refers to the amortization method of amortizing half when receiving low-value consumables and amortizing half when discarding. This method is simple to calculate, but the amortization amount at the time of scrapping is large and the balance is poor.

When receiving: borrowing: low-value consumables - in use.

Credit: Low-value consumables – in stock.

Borrow: Administrative expenses - amortization of low-value consumables.

Credit: Low-value consumables - Amortization of low-value consumables.

When scrapping, 50% of the actual cost of scrapped low-value consumables, the difference after deducting the value of residual materials will be included in the management expenses.

Borrow: material material (residual material value).

Low-value consumables – Amortization of low-value consumables (amortization).

Administrative expenses – amortization of low-value consumables (the difference between 50% of the actual cost of scrapped low-value consumables minus the value of residual materials).

Credit: Low-value consumables – in use (actual cost of scrapped low-value consumables).

The amortization methods of low-value consumables mainly include the one-time amortization method, the installment amortization method, the five-five amortization method and the net amortization method. What should I do about the accounting treatment of the amortization of low-value consumables?

Amortization accounting entries for consumables with low values.

1) When receiving:

Borrow: Turnover materials – low-value consumables – in use.

Credit: Turnover materials - low-value consumables - in stock.

2) Amortize half of its value when it is first received:

Borrow: manufacturing costs.

Credit: Turnover Materials – Low-Value Consumables – Amortization.

3) Amortization of half of its value at the time of the second use:

Borrow: manufacturing costs.

Credit: Turnover Materials – Low-Value Consumables – Amortization.

At the same time: borrow: turnover materials - low-value consumables - amortization.

Credit: Turnover materials – low-value consumables – in use.

What is Turnover Material?

Rotating materials are also known as "rotating materials". During the construction process of construction and installation projects, it can be used many times and basically maintain its original physical form, and its value is gradually transferred to the project cost, but it does not constitute the instrumental material of the engineering entity.

Set up a Rotating Materials account. The debit side is registered in the library and in use; The credit registers the number of requisitioned, scrapped, shortfall or return; The balance represents the number of buckets in the library and in use. This account should be divided into two detailed accounts, "turnover materials in front of the reservoir" and "turnover materials in use", for detailed accounting.