Accelerated depreciation of fixed assets

Fixed assets used in the company wear out over time, and their value decreases. Therefore, persons carrying out activities and owning assets in the register of fixed assets make so-called depreciation charges. Thanks to them, the initial cost of this fixed asset is gradually recognized as part of tax expenses.

Depreciation (A) is a term that defines the decrease in the value of a thing at a given moment as a result of its use. A is applied to fixed assets and determines the real value of the object.

In certain situations, an entrepreneur can accelerate period A of fixed assets by increasing the standard depreciation rate. Accelerated linear A can only be applied to items of property used in hazardous conditions or subject to rapid technological advances. This will be discussed in this article.

Essence and concept

Accelerated depreciation is based on the principles of straight-line A. This means that all write-offs are equal, but their value is higher than in the case of straight-line depreciation. Fixed assets are calculated in a shorter period of time.

The essence of accelerated depreciation is as follows: entrepreneurs can shorten period A by applying increased rates. Of course, this is only possible after certain requirements are met, such as the use of fixed assets in conditions that indicate rapid consumption or in which rapid technological progress is observed.

It is preferable to use increased depreciation rates for buildings, vehicles and equipment subject to increased wear and tear. The legislation contains detailed instructions regarding the possibility of applying higher standards A.

Accelerated depreciation increases the amount of write-offs from fixed assets, while reducing the term A and the amount of taxes.

Calculation of accelerated depreciation of fixed assets

In accordance with the Law “On Leasing” (Article 31) and the Tax Code (subparagraph 1 of paragraph 2 of Article 259.3), the balance holder of the leased asset has the right to apply accelerated depreciation to the leased property with a coefficient of up to 3. However, there is a limitation: the accelerated depreciation rate does not apply to property belonging to the first – third depreciation groups (i.e. with a useful life of more than 1 year to 5 years).

When applying an accelerated depreciation factor, the current depreciation rate is multiplied by an increasing factor. In this case, the coefficient can be selected in the range from 1 to 3 and take not only integer values, but be equal, for example, 1.5, 1.63, 2, 3, etc.

What is it used for?

It is important to note that accelerated depreciation can be applied to all types of fixed assets. The entrepreneur has the right to increase the rates arising from the list of norms A, using the appropriate coefficients for:

buildings and structures used in deteriorated or poor conditions;
machines, devices and vehicles (except for the marine fleet) used more intensively than in average conditions or requiring special technical efficiency;
machines and equipment that are subject to rapid technological progress.

All the main conditions for the use of this method are listed in Art. 259.3 Tax Code of the Russian Federation.

What is amortization of intangible assets

The last important concept that should be mentioned in this article is amortization of intangible assets. As is known, large investments and costs can be associated not only with the acquisition of fixed assets (machines, equipment, buildings and structures), but also with the acquisition of intangible assets (licenses, patents, copyrights), which have an equally positive impact on the final financial company result.

In general, the principle of calculating depreciation for intangible assets is similar to the principle of working with fixed assets. There is also a gradual transfer of the value of intangible assets in the process of their production use into the cost of the final product. It is worth noting that straight-line amortization .

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Conditions of use

Accelerated depreciation is the transfer of asset cost to product cost at an accelerated rate.

Since such deductions are accepted as expenses for income tax, tax regulations strictly regulate the issue of accelerated write-off.

When depreciating an asset using the accelerated method, it is allowed to apply one increase in depreciation from among the possible ones. The ban on the introduction of several coefficients was previously contained only in letters from the Ministry of Finance, but as of January 1. In 2014, it was enshrined in clause 259.3 of the Tax Code of the Russian Federation.

The taxpayer must indicate in the accounting policy what acceptable indicator will be used to calculate A at the rate.

The main prerequisites for using this type of accelerated depreciation:

there is an urgent need to quickly write off an object;
with increased equipment load at the very beginning of activity;
if such objects include: electronic equipment, quickly becoming obsolete models;
when regulating the load on a non-current asset;
problems with writing off funds.

Situations for using the method

List of situations allowing the use of accelerated depreciation rates:

Aggressive environment conditions. The introduction of the coefficient is assigned to OSs that are operated in conditions of high environmental aggressiveness. The increase in coefficient A is no more than 2.
Conducting agricultural production work provides for accelerated depreciation of all fixed assets. The increase in the coefficient is no more than 2.
The company's work in an industrial-production or tourist-recreational zone gives the right to use a coefficient within 2 for all fixed assets used in the work.
For objects on the balance sheet of the lessor (lessee) OS - coefficient 3.
Application for offshore hydrocarbon production. The right to this depreciation within a coefficient of no more than 3 is provided for companies that have a license for this activity and offshore oil production operators. This exception applies to equipment that is used to develop a new mine.
From 01/01/2008, depreciation of 3 times is applied to water supply and sewerage assets in the list that was approved by the Cabinet of Ministers of Russia.

The Tax Code does not prohibit the introduction of several coefficients for different groups of fixed assets. Aspects of the introduction of ratios must be specified in the company's accounting policies.

Non-linear depreciation method

The essence of the non-linear method of forming depreciation charges is to write off the main (larger) cost of the depreciable property during the first years of its use.

The formula for the non-linear depreciation will look like this:

G= Gf/n * 100, where

G— depreciation ;

Gf - acceleration coefficient;

n is the useful life of the fixed asset item.

This method is more convenient from the point of view of influencing the amount of tax deductions. Because by writing off most of the costs, you can thereby reduce the amount of taxable profit. But on the other hand, the use of non-linear depreciation is not always advisable and not even always legal.

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Calculation formula

In accounting, this method is also called the reducing balance method, where the application is based on the residual value of the asset, the acceleration factor and the useful life itself.

The accelerated depreciation formula looks like this:

A = St / SPI * K,

where A is the amount of depreciation charges, t. rub.;

St – residual value of the asset at the beginning of the year, t. rub.;

SPI – time of use of the asset, years;

K – acceleration coefficient. The maximum value is 3. For small enterprises - no higher than 2.

Depreciation rate of fixed capital

Fixed capital is part of the financial capacity of the enterprise, which, one way or another, is used in the production process and is in the possession of the company for more than 1 year. Fixed capital is also subject to the depreciation rules set out above, but with some amendments and nuances when calculating accelerated depreciation.

Fixed capital is conventionally divided into active and passive parts. Active includes all structures, mechanisms and objects directly involved in the production process.

The passive part of fixed capital is any material items that create conditions for the trouble-free functioning of the active part of the fixed capital of an enterprise. To have an idea of the value of assets to which one or another accelerated depreciation rate will be applied, it is necessary to correctly determine the cost indicator, which can be of 5 types:

Initial cost is an indicator that reflects the purchase price of material capital, and also takes into account the costs of its delivery and installation.
Replacement cost is a change in the value of tangible property, which directly depends on the value of tangible capital this year, while all indicators are specified according to the table provided by the State Statistics Committee of the Russian Federation.
Residual value is the difference between the original cost and depreciation of tangible capital.
Current value is the market value of an asset, which is determined by the relationship between supply and demand. This indicator is calculated only in current year prices.
Liquidation value - this indicator can have either a positive or negative value.

The liquidation value is calculated from the receipt of funds from the sale of scrap fixed capital, minus the cost of dismantling and transportation costs. The cost of fixed capital may depend on depreciation, which is of 2 types:

Physical wear and tear is a set of factors that have a negative impact on the technical condition of material capital. Physical wear and tear depends on the conditions under which certain material assets were exploited, as well as the intensity of such exploitation.
Obsolescence can be caused both by the overproduction of certain material assets, which results in a sharp decrease in the cost of new products, and by the release of technologically advanced models, which, in comparison with existing types of material capital, have greater productivity.

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Odds

The acceleration rate is a statutory fixed rate used to calculate the accelerated depreciation of fixed assets when a company has a basis.

This indicator varied from 2 to 3.

Using this indicator, the manufacturer includes the cost of depreciation of the operating system in the final price of the product, taking into account the multiplication by this indicator.

At the end, these amounts are reflected in the final cost of production in the direction of growth, which helps to compensate for equipment costs and reduce the amount of tax payments.

Factors that increase the value of depreciation write-offs used on this basis can be a maximum of:

1.2 in the case of buildings and structures used in deteriorated conditions;
1.4 in the case of buildings and structures used in poor conditions and the above-mentioned devices and vehicles;
2.0 for machines and equipment of groups 4-6.

What is important is that the coefficient applied by the entrepreneur should not reach the maximum amount specified in the regulations. However, it is worth remembering that choosing the highest possible ratio leads to the maximum reduction in the depreciation period.

Depreciation acceleration factor

Accelerated depreciation results in a faster transfer of asset value. This happens faster than the standard plan suggests. The main advantage of accelerated depreciation is a faster way to write off the residual value of fixed assets. For this purpose, special acceleration coefficients are used. They are used in both tax and accounting.

The maximum acceleration factor that is allowed to be used in accounting by law is 3. According to Article 259 of the Tax Code of the Russian Federation, it is allowed to use a factor of 2 or 3. There are no other provisions officially provided for this.

In what cases is coefficient 2 applied?

Each coefficient has its own limitations. The legislation allows the use of coefficient 2 for the following cases:

Fixed assets are used for depreciation of objects operating in conditions of increased shifts and in aggressive environments.
OS are used for residents in tourist and other special economic zones.
Agricultural facilities are being restored.
Depreciation of objects that, according to legislation, fall under a high energy efficiency class.

Application of coefficient 3

Due to the fact that the coefficient itself is much higher, it is allowed to be used less frequently. It is relevant for the following cases:

Depreciation of scientific and technological objects.
For objects of a long-term lease agreement (used for taxpayers who have entered into an agreement with the condition of accounting for depreciation of fixed assets).

The calculation formula for all coefficients looks like this:

Where: Ag – amount of depreciation (annual); О – residual value of the fixed asset; SPI – useful life in fixed assets (in years) K – applied coefficient.

Methods

Accelerated depreciation methods include the following:

reducing balance;
write-off of value based on the number of years of useful life;
use of increasing coefficients.

The last method is the most common.

When applying the first method, the value of the property is measured, provided that the corresponding objects may be characterized by uneven returns throughout the entire period of application. It is relevant for products that quickly become obsolete.

The second method allows you to write off most of the cost of the operating system in the first years of operation of the object completely.

Redemption of the leased asset

When renting through leasing, it is beneficial not only to accelerate depreciation, but also to buy the object at a minimum residual value. This type of agreement allows you to purchase an item after a specified rental period has expired. In this case, you can use the accelerated depreciation method. In this case, the equipment belongs to the fifth depreciation group; it can be written off after 28 months of operation. This can be done if depreciation is accelerated and the item has a minimum residual value. Then it can be purchased at a profit.

Application of accelerated depreciation during leasing

Organizations that have a leased asset on their own balance sheet can accrue A at an accelerated rate with a coefficient of no more than 3. The exception is objects of the 1st, 2nd and 3rd groups.

If the object is the entire enterprise, as a single material complex, accelerated depreciation under the leasing agreement is charged on all fixed assets, not counting assets belonging to the 1st, 2nd and 3rd groups.

Civil servants of the Ministry of Finance of the Russian Federation indicate that the lessor has the right to continue accrual at an accelerated pace, even if the tenant has changed.

A new tenant can use incremental values up to 3 when receiving a leased item that was previously owned by another user. The new owner can independently set the size of the coefficient, without relying on past data.

If the leased asset is used under an agreement concluded before January 1, 2002, it is accrued accelerated depreciation in accordance with the following rules:

fees correspond to the method used to transfer property;
accrual occurs using a coefficient of no more than 3;
property depreciated in a non-linear manner should be separated into a separate subgroup.

Accelerated depreciation methods

The essence of calculations of accelerated depreciation in accounting, management, and tax accounting of enterprises is the accrual and transfer to costs of most of the cost in the first years of using fixed assets and intangible assets. By quickly replenishing the depreciation fund, business entities free up additional financial resources for the speedy acquisition of more advanced equipment and intellectual resources (computer programs, rights to use inventions).

Accelerated transfer of the cost of fixed capital to expenses involves the use of special coefficients and formulas in calculations. In countries with individual technical and economic conditions, different methods of calculation indicators are used:

Depreciation methods

The accounting provisions of the Russian Federation (clause 19 of PBU 6) provide for the possibility, by decision of the enterprise, of accruing accelerated depreciation of fixed assets using the linear method and the reducing balance method, taking into account the useful life of the object and a special acceleration index of up to 3 units. A similar procedure is established by paragraph 29 of PBU 14 for depreciation of intangible assets.
In countries with high rates of technical re-equipment (Germany, Japan, Great Britain), an annual 25% reduction in the residual value of machinery and equipment is used for calculations.
In France, accelerated depreciation is applied selectively to certain groups of fixed assets. Computer equipment and software are allowed to be depreciated during the first annual operating cycle. It is allowed to expeditiously transfer into expenses the cost of PF used for environmental purposes and energy conservation.
World leaders in the chemical industry use the double regression method and the cumulative method, which allow, in the initial period of application, to transfer to expenses and replenish the depreciation fund from 67 to 73% of the cost of machines and other technical equipment.

When choosing a specific calculation method, each enterprise takes into account the accounting rules established in the state and economically advantageous conditions.

Example

The transport company purchased an SUV that will transport expedition participants along with all the necessary equipment. Due to the purpose of this vehicle and the difficult operating conditions in which it will be used, it was decided to increase the depreciation rate using the maximum coefficient: 1.4. The initial cost of the car was 700 thousand rubles.

Calculation of monthly depreciation: 700 thousand rubles. X 20% x 1.4: 12 months = 16.33 thousand rubles.

In the case of traditional depreciation, the monthly write-off will be: 700 thousand rubles. X 20%: 12 months = 11.66 thousand rubles.