Depreciation life of fixed assets, determination and change of salvage value (rate), accelerated depreciation, etc. (1)

Sometimes some enterprises will change the accounting depreciation period, of course, often extend the accounting depreciation period, which is generally for the consideration of increasing profits, for example, to carry out some mergers and acquisitions, loans and other businesses, there will be requirements for profits. Sometimes the financial staff will take some measures like this, so can the depreciation period of the fixed asset and the salvage value (rate) be changed?

First, the factors affecting the depreciation period and the salvage value (rate).

The determination of depreciation period and salvage value (rate) needs to comprehensively consider various factors and coordinate the relationship between various aspects, otherwise it will cause accounting and/or tax impacts, which is not conducive to standardized treatment.

Consider point 1:

Accounting estimates of depreciation of fixed assets in the same industry. For companies to be IPO, it is important to be comparable in the same industry, if the company has a long depreciation period, indicating that there is a possibility of inflated profits, accounting estimates are not prudent; if the depreciation period is short, it is not good for the company's profits. In short, in a word, to ensure the comparability of the same industry.

Consideration point 2:

After all, the accounting estimate is an estimate, it is impossible to be completely consistent with the actual situation, the depreciation of the fixed assets is completed, the assets are still in use, and early scrapping is a common situation, in a reasonable estimation period, try to maintain consistency with tax requirements.

Article 60 of the Implementing Regulations on Income Tax The requirements for the depreciation period of fixed assets are as follows: Unless otherwise stipulated by the competent department of finance and taxation under the State Council, the minimum period for calculating depreciation of fixed assets is as follows:

(1) Houses and buildings, for 20 years;

(b) aircraft, trains, ships, machinery, machinery and other production equipment for a period of 10 years;

(3) 5 years for appliances, tools, furniture, etc. related to production and business activities;

(4) Means of transport other than airplanes, trains and ships shall be 4 years;

(5) Electronic equipment, for 3 years.

Consider point three:

The above two points are an important reference basis for determining the depreciation estimate of fixed assets, but the most important thing is to make a reasonable estimate based on the actual situation of the company's assets. For example, although the depreciation of certain types of fixed assets in the same industry is generally 10 years, the construction value of the assets held by the company is higher than that of the same industry, the quality is better, and it is reasonable to have a longer depreciation period than the same industry.

Second, the impact of accounting depreciation years meeting the requirements of the tax law

The basic logic of the tax law is to stipulate the minimum depreciation period, the purpose is to prevent the depreciation period formulated by the enterprise from being too short, the deduction of income tax is too fast, and affecting the tax source, of course, this point is adjusted by a series of accelerated depreciation policies, which will be discussed later.

Therefore, in general, the depreciation of enterprises is longer than the timing of tax regulations, and the tax will generally be consistent, and if it is shorter than the provisions of the tax law, it is necessary to increase the tax. This point is also specified in the State Administration of Taxation Announcement [2014] No. 29:

(1) If the accounting depreciation period of an enterprise's fixed assets is shorter than the minimum depreciation period stipulated in the tax law, and the depreciation accrued according to the accounting depreciation period is higher than the depreciation part calculated according to the minimum depreciation period stipulated in the tax law, the taxable income of the current period shall be increased;

The accounting depreciation period of an enterprise's fixed assets has expired and the accounting depreciation has been fully raised, but the minimum depreciation period stipulated in the tax law has not yet expired and the tax depreciation has not been fully deducted, and the part that has not been fully deducted is allowed to continue to be deducted in accordance with the provisions in the remaining tax depreciation period.

(2) If the accounting depreciation period of an enterprise's fixed assets is longer than the minimum depreciation period stipulated in the tax law, its depreciation shall be calculated and deducted according to the accounting depreciation period, unless otherwise provided by the tax law.