Depreciation. Every entrepreneur should know this!

Amortization is a long process of transferring the original value of worn out labor (that is, basic) to the product that was produced with their help. The term itself came from the Latin word "amortisatio", which translates as "repayment." There is also accelerated depreciation. This process of deductions, occurring at higher rates than the average or current.

Depreciation deductions are an instrument of compensation for wear and tear of fixed assets. They exist in the form of funds, which are sent later for construction or repair, as well as the production of new means of labor. They are produced according to strictly defined norms as to the value of the object of the main funds. Deductions are usually included in the costs of circulation or production. In order to find the period of depreciation, it is necessary to divide the SRT into its norm.

What is the depreciation rate?

This is a predetermined percentage of the annual reimbursement of the original price of the worn out or lost part of the means of labor.

Depreciation in accounting

To date, there are four methods for calculating depreciation for accounting purposes:

1. The first method is called the method of decreasing residue. For each period, the total amount of depreciation equals the value of the residual, multiplied by a strictly defined percentage. Annually depreciation is charged to the value of the balance at the beginning of the year.

2. The linear way in which depreciation is charged. This is a uniform accrual of depreciation from the original to the residual price. It is carried out during the entire period of using the means of labor. The current residual value (the one that exists at the moment) can be determined by subtracting the accumulated total depreciation of the asset from the original cost.

3. The method of writing off the initial cost in proportion to the volume of work done (or produced products). In this case, the process occurs on the basis of a certain natural indicator (for example, the hour of using the equipment - machine or machine).

4. The method of gradual write-off of cost, oriented on the sum of useful life.

Depreciation in tax accounting

How is depreciation carried out in tax accounting? This is a process that is quite formal in nature, for the reason that it describes rather not real wear and tear, but the statutory limits on depreciation. They allow you to reduce the income tax base. In tax accounting, there are two ways to deduct depreciation facilities: linear and non-linear. The company must choose the way to deduct depreciation. The obligatory condition is the use of the chosen method to any group of objects during the whole period of useful use.

According to the current Russian tax legislation, the property of the company is divided into non-depreciable and amortized. At the same time, the latter is the property of the enterprise or organization, which is represented in the form of the results of intellectual work and used to generate income. Its difference from non-depreciable property is that the cost of this is paid off by accruing depreciation. Property is recognized as amortized if its service life is more than twelve months, and the initial cost is more than forty thousand rubles.

The management of any enterprise needs to know what amortization is. This will allow you to correctly calculate the profits of your company and do not stay in the red when the equipment is worn out or out of order.