Recommendations Р-Х/2014-КпТ “Depreciation of fixed assets after reconstruction”

There are often cases when a company's fixed assets require modification, completion or technical repurposing. This happens, for example, when operating equipment cannot comply with the new technologies introduced, but with appropriate reconstruction it will serve for a very long time. The issue of saving money is also important here, which is always acute in any organization: as a rule, modernizing production is cheaper than completely replacing equipment. Naturally, reconstruction costs are exclusively capital in nature and increase the initial cost. Let's consider how the cost of a modernized object increases, and we will learn how to calculate depreciation after modernization in accounting .

Depreciation after modernization

Companies have the right to modernize fixed assets that are either fully depreciated or still have a residual value. In both situations, it is necessary to take into account reconstruction costs and calculate depreciation. How to do it? The algorithm of actions is as follows:

• Accumulation of all modernization costs, i.e. collection of documented expenses and drawing up the total amount. Modernization work can be carried out by attracting third-party specialized companies, or on your own (if there is appropriate potential). The document confirming the commissioning of the facility modernized by the contractor is the acceptance certificate signed by representatives of the company and the contractor, and the scope of work and the amount of costs is the act f. KS-2 and certificate of cost of work f. KS-3. Work on the reconstruction of the facility using economic means (on our own) is confirmed by a whole block of documents: requirements-invoices for the release of goods and materials, limit cards, work orders. Completion of work and commissioning is recorded by an internal acceptance certificate indicating the full cost of the work;
• Registration of the protocol of the inventory commission for the commissioning of a modernized facility with a decision to increase the cost of the facility and increase the useful life after modernization, if the capital work carried out actually increased the SPI. In accounting, there is no procedure for determining a new SPI if an object with an expired term is being modernized, however, clause 20 of PBU 6/01 and clause 60 of the Guidelines for fixed assets accounting, approved by Order of the Ministry of Finance of the Russian Federation dated October 13, 2003 N 91n, allow the extension of SPI if As a result of the work carried out, the functional characteristics of the facility improved. At the same time, changing the SPI of the reconstructed OS in accounting is a right and not an obligation of the company. Note that most often the SPI is extended by the amount of time necessary to write off capital costs.
• According to the Ministry of Finance, the amount of modernization costs increases the initial cost (IC) of the fixed assets, and the depreciation rates for writing off these costs are those that were initially applied when the property was put into operation. This opinion also works in practice.

Depreciation after modernization

An example of calculating depreciation for a fully depreciated object

In 2021, the company completed the modernization of the production line belonging to the 4th depreciation group with SPI from 5 to 7 years. Substation lines upon commissioning (January 2010) – 500,000 rubles. The SPI was set at 80 months. Depreciation rate (RA) – 1.25% (1/80 month). Depreciation was calculated from February 2010 to September 2021, and at the end of 2021, when it was decided to reconstruct the line, the facility was fully depreciated. In March 2021, the corresponding work was completed, the amount of reconstruction without VAT amounted to 350,000 rubles. From April 2021, the company begins to write off modernization costs, using the mechanism for calculating depreciation as follows:

C after modernization is 850,000 rubles. (500,000 + 350,000). The NA should be the same as at the time the line was entered, i.e. 1.25%. Consequently, the amount of monthly depreciation will be 10,625 rubles. (RUB 850,000 x 1.25/100). The costs of the completed modernization should be written off over 32 months at 10,625 rubles. (340,000 rubles), in the 33rd month the amount of depreciation will be 10,000 rubles.

Calculation of depreciation during modernization

If an object with an existing residual value is being reconstructed, then monthly depreciation is calculated according to accepted standards throughout the entire period of capital work. Clause 23 of PBU 6/01 dictates the suspension of the accrual of depreciation if it continues for more than 12 months. The Tax Code of the Russian Federation in this case agrees with a similar approach (clause 3 of Article 256 of the Tax Code of the Russian Federation). After the modernized facility is put into operation, the amount of monthly deductions changes, since both the SPI and the cost of the operating system change.

The calculation of depreciation for an asset begins on the first day of the month following the month in which this object was accepted for accounting; for example, for an object put into operation in March, depreciation will begin to be calculated according to the adjusted calculation on April 1. And it doesn’t matter whether depreciation accumulations were suspended due to exceeding the legally established reconstruction period or not.

When using the linear method, depreciation in accounting is calculated using the formula:

A = (OS + M) / SPI, where:

• OS - residual value of fixed assets;
• M - modernization costs;
• SPI - new SPI after modernization or the remaining one if it has not been changed.

How to take into account the modernization of a fixed asset in tax accounting

Expenses for the modernization of production facilities (except for those expenses for which you applied an investment deduction) are written off as income tax expenses through depreciation. This follows from paragraph 2 of Art. 257, clause 5.1 art. 270, paragraph 7, art. 286.1 Tax Code of the Russian Federation.

With the linear method of calculating depreciation, include modernization costs in the initial cost of the fixed asset, and with the non-linear method - in the total balance of the depreciation group (subgroup) (clause 2 of Article 257, clause 3 of Article 259.2 of the Tax Code of the Russian Federation).

If you use the accrual method , increase the initial cost of the fixed asset (total balance of the depreciation group) after completion of the modernization, and with the cash method - after paying the costs of its implementation (clause 1 of Article 272, clause 3 of Article 273 of the Tax Code of the Russian Federation).

If, as a result of modernization, the fixed asset changes in such a way that a new fixed asset is created, then determine the initial cost of the property in the manner established by Art. 257 of the Tax Code of the Russian Federation (Letter of the Ministry of Finance of Russia dated 04.08.2016 N 03-03-06/1/45862).

Expenses for modernization of non-production facilities and expenses for modernization for which an investment deduction is applied are not taken into account in tax accounting (clause 1 of article 252, clause 5.1 of article 270 of the Tax Code of the Russian Federation).

What is OS upgrade

OS modernization includes work that results in a change in its technological or service purpose; it can also be endowed with the ability to withstand increased loads and (or) other new properties (qualities) (clause 2 of Article 257 of the Tax Code of the Russian Federation). For example, upgrading can include installing an additional memory card on a computer in order to increase its RAM.

How to calculate depreciation when modernizing a fixed asset

If the modernization takes more than 12 months, then, as a general rule, the fixed assets must be removed from the depreciable property, that is, the calculation of depreciation should be suspended (clause 3 of Article 256 of the Tax Code of the Russian Federation).

to suspend the calculation of depreciation (regardless of the method of its calculation) from the 1st day of the month following the month of exclusion of fixed assets from the depreciable property. At the same time, remember that if you use a non-linear method, you additionally need to reduce the total balance of the depreciation group (subgroup) from which you excluded the fixed asset by its residual value (clause 6 of article 259.1, clause 8 of article 259.2 of the Tax Code of the Russian Federation) .

The calculation of depreciation must be resumed from the 1st day of the month following the month of completion of the modernization (clause 7 of article 259.1, clause 9 of article 259.2 of the Tax Code of the Russian Federation). And if you use the non-linear method, then you need to increase the total balance of the depreciation group (subgroup) to which you returned the asset by its residual value (taking into account its change after modernization) (clause 9 of Article 259.2 of the Tax Code of the Russian Federation).

If the modernization is carried out for 12 months or less, as well as more than 12 months, but the OS continues to be used in commercial activities during the modernization process, then depreciation for such OS does not need to be suspended. This follows from paragraph 3 of Art. 256 Tax Code of the Russian Federation.

How to calculate depreciation after modernization of a fixed asset

Using the linear method, calculate depreciation after modernization of a fixed asset using the following formula (clause 2 of Article 257, clause 2 of Article 259.1 of the Tax Code of the Russian Federation):

In this case, depreciation can be calculated according to the old depreciation rate, which was determined when the OS was put into operation. If, after modernization, the useful life of the asset has increased, then you have the right to recalculate the depreciation rate based on the new SPI. This follows from paragraph 1 of Art. 258, paragraph 2 of Art. 259.1 of the Tax Code of the Russian Federation, Letters of the Ministry of Finance of Russia dated October 25, 2016 N 03-03-06/1/62131.

See also: How to calculate depreciation in tax accounting

Using the non-linear method, calculate depreciation after modernization using the following formula (clause 2 of Article 257, clause 1 of Article 258, clauses 3, 4 of Article 259.2 of the Tax Code of the Russian Federation):

Do not change the depreciation group rate.

How does the useful life change after modernization of a fixed asset?

If, after upgrading, the useful life of the OS has increased, then you have the right to increase this period. However, this can only be done within the period established for the depreciation group in which you previously included the fixed assets (clause 1 of Article 258 of the Tax Code of the Russian Federation).

If the useful life of the object has not increased, take into account the remaining useful life (clause 1 of Article 258 of the Tax Code of the Russian Federation).

How to apply bonus depreciation when modernizing a fixed asset

In tax accounting for expenses for the modernization of fixed assets (except for expenses for which an investment deduction is applied), you have the right to apply a depreciation bonus in the amount (clause 9 of Article 258, clause 7 of Article 286.1 of the Tax Code of the Russian Federation, Letter of the Ministry of Finance of Russia dated 09.06. 2015 N 03-03-06/1/33417):

no more than 10% - for fixed assets that belong to the first - second, eighth - tenth depreciation groups;

no more than 30% - for fixed assets that belong to the third to seventh depreciation groups.

That is, you have the right to write off as expenses of the current reporting (tax) period up to 10% or up to 30% of the costs incurred as a result of upgrading the OS.

If you modernize property several times during its useful life, then you can apply a depreciation bonus for each modernization (Letter of the Ministry of Finance of Russia dated 08/09/2011 N 03-03-06/1/462).

Depreciation after modernization

An example of a calculation for an object with an existing residual value:

The machine was retrofitted at an initial cost of RUB 220,000. and SPI 5 years after 3 years of operation in the amount of 50,000 rubles. The machine has been in operation since February 2013, depreciation has been calculated since March 2013. The modernization of the machine began in January 2021 and ended in February 2021 inclusive. Depreciation was accrued in the amount of RUB 132,000. (220,000 / 60 x 36). SPI after retrofitting was increased by 2 years, and depreciation, taking into account the increase in cost and SPI, began in March 2021.

Monthly depreciation amount:

(220,000 – (220,000: 60 months x 36 months) + 50,000) / 48 months = 2875 rubles , i.e. PS is reduced by the amount of accrued depreciation of 132,000 rubles. (220,000 / 60 x 36) and increases by the amount of modernization. The resulting cost of the operating system is divided by 48 months, i.e. by the established SPI.

Based on this calculation algorithm, it is easy to determine deductions for other methods of calculating depreciation.

Accounting

Table 2.

Table 3. Visual calculation of monthly depreciation before and after modernization of an asset