Do fixed assets that are not used temporarily need to be depreciated?

Hello, happy with your question.

Fixed assets that are not used temporarily are also subject to depreciation.

In the process of production and operation, the enterprise uses fixed assets and causes the loss of their value to reduce only a certain residual value, and the difference between the original value and the residual value is apportioned over its useful life, which is the depreciation of fixed assets. Determining the depreciation range of a fixed asset is a prerequisite for accruing depreciation. [1]

A monetary estimate of the value of the capital expended during the period examined. Also known as capital consumption allowance in the national income account. 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.

Useful life refers to the expected life of a fixed asset, or the quantity of goods or services that the fixed asset can produce. Accrued depreciation refers to the amount of the original price of a fixed asset for which depreciation is accrued after deducting its estimated net residual value. For fixed assets for which provision for impairment has been made, the cumulative amount of provision for impairment of fixed assets shall also be deducted.

Depreciation should also accrue if it is not used temporarily. According to the provisions of the accounting standards, an enterprise shall provide depreciation for all fixed assets, except for fixed assets that have been fully depreciated and continue to be used and land that is separately valued and recorded.

Unused fixed assets need to be depreciated, but the tax law stipulates that depreciation accrued for unused fixed assets is not allowed to be deducted before tax, except for buildings. Article 11 of the Enterprise Income Tax Law of the People's Republic of China When calculating the taxable income, the depreciation of fixed assets calculated by the enterprise in accordance with the provisions shall be allowed to be deducted.

The following fixed assets are not subject to depreciation deductions:

1) Fixed assets other than houses and buildings that have not been put into use.

2) Fixed assets leased in the form of operating leases;

3) Fixed assets leased out in the form of financial leases;

4) Fixed assets that have been fully depreciated and continue to be used;

5) Fixed assets unrelated to business activities;

6) Land recorded as fixed assets for separate valuation;

7) Other fixed assets that are not subject to depreciation.

Fixed Assets for Depreciation: Buildings and Buildings; machinery and equipment, food instruments, transport vehicles, tools and appliances in use; Seasonal shutdown and repair of out-of-service equipment; Fixed assets leased out in the form of operating leases and fixed assets leased in the form of financial leases.

Fixed assets without depreciation: fixed assets that have been fully depreciated and continue to apply; Land that has been valued separately in previous years; Fixed assets that are retired in advance; Fixed assets leased in the form of operating leases and fixed assets leased in the form of financial leases.

Unused fixed assets also need to be depreciated, because although the fixed assets are not used, they will also have natural wear and tear, and this part of the natural wear and tear should be included in the expense.

Enterprises shall depreciate unused fixed assets, except for fixed assets that have been fully depreciated and continue to be used and land that is separately valued and recorded; In addition, depreciation of fixed assets shall be accrued on a monthly basis, and the depreciation of fixed assets increased in the current month shall not be accrued in the current month, and depreciation shall be accrued from the next month;

From an accounting point of view, depreciation should be provided for fixed assets that have reached a predetermined usable state.

However, the tax law stipulates that depreciation is not accrued for fixed assets that have not been put into use, except for buildings.

Unused fixed assets do not need to be depreciated, but fixed assets that are temporarily unused or discontinued need to be depreciated.

According to the accounting standards, unused fixed assets are also subject to depreciation, which is accrued from the second month of purchase.

The Notice of the Ministry of Finance on Printing and Distributing the Accounting System for Business Enterprises (Cai Hui [2000] No. 25) is required

Article 35 The following fixed assets shall not be depreciated:

1) Unused and unused fixed assets other than houses and buildings;

2) Fixed assets leased in the form of operating leases;

3) Fixed assets that have been fully depreciated and continue to be used;

4) The land recorded as a fixed asset shall be separately valued in accordance with the regulations.

Accounting Standards for Business Enterprises - Fixed Assets (Cai Kuai [2001] No. 57) Except for the following circumstances, enterprises should provide depreciation for all fixed assets:

1) Fixed assets that have been fully depreciated and continue to be used;

2) Land recorded as fixed assets shall be separately valued in accordance with the regulations.

Accounting Standards for Business Enterprises No. 4 - Fixed Assets (2006) Article 14 An enterprise shall provide depreciation for all fixed assets. However, this excludes fixed assets that have been fully depreciated and continue to be used and land that is separately valued.

From the above provisions, it can be seen that the standard is different from the original system on whether depreciation is provided for fixed assets that are not needed. According to the standard, an enterprise should provide depreciation for all fixed assets "except for fixed assets that have been fully depreciated and continue to be used and land that is separately valued and recorded".

Fixed assets that do not require depreciation:

Fixed assets without depreciation:

1.Land; 2.Unused, unneeded and mothballed fixed assets other than houses and buildings;

3.Fixed assets leased in the form of operating leases and fixed assets leased in the form of financial leases.

4.Fixed assets that have been fully depreciated and continue to be used;

5.Fixed assets for which maintenance fees are withdrawn in accordance with regulations;

6.Fixed assets that have been charged in a lump sum at cost;

7.fixed assets of bankrupt or closed down enterprises;

8.Other fixed assets that are not subject to depreciation as stipulated by the Ministry of Finance. Depreciation shall not be accrued for fixed property that has been scrapped in advance.

China's standards stipulate that enterprises should depreciate all fixed assets except in the following circumstances:

Fixed assets that have been fully depreciated and continue to be used;

Land that is accounted for as a fixed asset is valued separately.

Fixed assets leased on an operating lease.

Fixed assets leased out on a financial lease.

Fixed assets that are in the process of being modernized.

Fixed assets held for sale.

Except for the above, depreciation is required.

There are 7 special cases in which depreciation is accrued (depreciation is required in the following cases):

Fixed assets leased out on an operating lease.

Fixed assets leased in the form of financial leases.

Fixed assets are not required.

Fixed assets that have reached the intended usable state but have not yet been settled at completion (the value of the asset is adjusted after the final accounts are completed, but the depreciation is not adjusted to the original).

Fixed assets that are retired due to changes in business tasks.

Production facilities that are out of service due to seasonal operations.

Equipment that is out of service due to repair (except for capitalization).

Depreciation is mentioned financially, because after all, with the update of technology and the aging and corrosion of equipment, it can't be said that the equipment you bought and put it in the warehouse for a year is still as valuable as the original, right? Therefore, the financial operation is the same to mention depreciation.

In addition, inventory is inventory, fixed assets are fixed assets, these two accounts are completely different, your company will temporarily spare fixed assets in inventory, itself is a mistake - the correct way should be to open a "standby" account under the fixed assets account to collect these equipment, when receiving from the "standby" detailed account to the "in use" detailed account can be just - but your company may have wanted to make the balance sheet look better, the current ratio is larger, so there is such a mistake

Of course, the method of depreciation can be considered by the use of the equipment, and it does not matter if you are flexible.

However, the tax law stipulates that unused fixed assets are not allowed to be charged with depreciation, because unused fixed assets are obviously not allowed to contribute to the taxable income of the current year, so they are not allowed to be depreciated - so in practice, many enterprises do not take depreciation on unused fixed assets in order to save trouble, and this alternative method is also reasonable.

Summary: **The spare fixed assets should be recorded in the fixed assets-spare account, and transferred to the corresponding detailed account of the fixed assets when they are received; As for depreciation, it is completely possible to withdraw it from the next month after receiving it.

Depreciation should also be accrued on unused and unneeded fixed assets, and the depreciation accrued shall be included in the current management expenses.