Depreciable property: definition, requirements and features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Depreciable property is recognized as property, products of intellectual labor owned by an economic entity and used by it to generate income. At the same time, the period of useful operation of such objects should be at least 12 months. The initial cost of depreciable property should be more than 10 thousand rubles. Its repayment is carried out through depreciation.

Exceptions

Not every property that meets the above requirements will be considered depreciable. Exceptions, in particular, are:

1. Earth, other natural objects (subsoil, water, etc.).
2. Securities.
3. Inventories.
4. Objects with construction in progress.
5. Products.
6. Financial instruments (including futures, options, forward contracts).

Depreciable property not subject to depreciation

This group includes:

1. Material values of budget organizations. The exception here is property acquired in the course of business activities and operated for its implementation.
2. Values of non-profit organizations that are received in the form of targeted income or purchased with targeted funds and are used to conduct the main non-profit activities.
3. Values purchased with budget funds. The exception is the property received by the subject during privatization.
4. Objects of improvement, forestry, road facilities, the creation of which was carried out with the involvement of budgetary or other similar targeted financing, specialized structures for shipping purposes and other similar objects.
5. Purchased publications (brochures, books, etc.), works of art. The cost of such objects (except for works of art) is included in other costs associated with the release and sale of products at the time of purchase in full.
6. Buffaloes, productive livestock, deer, oxen, yaks and other domesticated animals other than draft animals.
7. Purchased rights to intellectual products or other intellectual property, if the contract of sale requires payment to be made periodically during its term.

Extra

Assets are also excluded from depreciable items:

1. Transferred to conservation, durationmore than three months.
2. Received/transferred under a free use agreement.
3. Under modernization/reconstruction, lasting more than 12 months

When re-mothballing depreciable property in accounting, depreciation amounts are accrued in the manner that existed before conservation, and the useful life is increased by its duration.

The initial price of an asset is defined as the sum of the costs of acquiring it and bringing it to a state of readiness for operation.

Depreciable property groups

They are formed depending on the useful life of the objects.

The economic entity may, at its discretion, extend the period after the date of commissioning if the modernization, reconstruction, technical re-equipment (re-equipment) led to an increase in the life of the asset.

For convenience, groups of objects are shown in the table.

Group	Term of use (in years, inclusive)
1	1-2
2	2-3
3	3-5
4	5-7
5	7-10
6	10-15
7	15-20
8	20-25
9	25-30
9	Over 30 years

Classification of fixed assets included in groups is approved by the Government.

General information on depreciation charges

Calculation of depreciation of depreciable property, in accordance with Art. 25 NK, produced in a linear or non-linear way.

The business entity determines the amount of depreciation for tax purposes separately for each asset on a monthly basis. Accrual starts on the 1st day of the month following the month the facility was put into operation. The calculation is also terminated from the 1st day of the month following the month of writing off fixed assets or leaving the depreciated property for any reason.

Nuances

For depreciated property included in groups 8-10, regardless of the period of putting it into operation, accruals are made on a straight-line basis. For other objects, an economic entity can apply any of two methods.

Please note that the selected method cannot be changed for the duration of the depreciation calculation.

Features of accrual

When using the straight-line method, the amount of depreciation is determined as the product of the original cost of fixed assets and the depreciation rate. The latter is calculated as follows:

K=[1/n] x 100%.

In this formula:

• depreciation rate in % of the original cost - K;
• useful life of an object, expressed in months, -n.

If a non-linear method is used, then the desired value is determined by multiplying the residual value of the depreciable property by the rate:

K=[2/n] x 100%.

Important points

When calculating, it must be taken into account that from the month following the month in which the residual value of depreciated property reaches 20% of the original, accrual should be made according to the following rules:

1. The residual value is recognized as the base value.
2. The amount of depreciation per month is calculated by dividing the base amount by the number of months remaining until the end of the useful life.

Odds

They are used when calculating the amount of depreciation of depreciated property operated in aggressive conditions or with increased shifts. The coefficients can also be used by agricultural enterprises: greenhouse complexes, poultry farms, livestock farms, etc. Some restrictions are set.

In particular, for these entities, a coefficient no higher than 2 can be applied. For fixed assets that are the subject of a leasing agreement, it is allowed to use a coefficient no higher than three in the calculation.

These provisions do not apply to the object included in groups 1-3 if the non-linear method is used.

Aggressive are recognized artificial or natural factors, the influence of which causes increased wear of the OS. Tofunctioning in such conditions is also equated to the presence of property in contact with a fire, explosive, toxic or other aggressive environment, which is the source (cause) of an emergency.

When calculating the amount of depreciation for passenger minibuses and cars, the initial cost of which is more than 400 thousand rubles. and 300 thousand rubles. accordingly, a coefficient of 0.5 is applied to the main norm.

According to the decision of the head of the enterprise, depreciation can be charged at reduced rates, but only from the beginning of the tax period and throughout it.

Taxation

For fixed assets put into operation before the entry into force of Ch. 25 of the Tax Code, the useful life is determined by the economic entity itself as of 01.01.2002, taking into account the classification approved by the Government, and the periods of operation by groups, fixed by Art. 258 of the Code.

Regardless of the accrual method chosen by the taxpayer in relation to depreciated property put into operation before the entry into force of Ch. 25, the calculation is based on the residual value.

Analytical accounting

It should reflect information about:

1. Initial cost of an object retired in the tax (reporting) period, as well as its changes in the course of additional equipment, completion, partial liquidation, reconstruction.
2. Useful lives assumed by the entity.
3. Accrual methods and depreciation amounts from the beginning of the calculation tothe end of the month in which the sale (disposal) of the object took place.
4. The value of the sale of property, in accordance with the contract.
5. The date of acquisition and sale (disposal) of fixed assets, its transfer to operation, exclusion from the list of depreciable objects on the grounds enshrined in paragraph 3 of Art. 256 of the Tax Code, reactivation of the asset, expiration of the agreement on gratuitous use, completion of work on modernization and reconstruction.
6. Costs incurred by the subject upon disposal of property. Speech, in particular, about the costs provided for sub. 8 p. 1 art. 265 TC, as well as the costs of storage, transportation and maintenance of the sold asset.

Profit received by an economic entity is included in the tax base in the reporting period in which the sale was made. Losses incurred by the taxpayer are recorded as other expenses, in accordance with the rules enshrined in Art. 268 NK.

Analytical accounting should contain information about the name of the assets in respect of which the amounts of the corresponding costs are fixed, the number of months during which they will be charged to other expenses, as well as the amount of monthly costs.