The Method Of Depreciation Of Fixed Assets Can Be Freely Chosen.

Accounting standards give enterprises the right to choose depreciation methods and years of depreciation of fixed assets. Enterprises can reasonably choose and fix depreciation methods of fixed assets according to the expected realization way of economic interests related to fixed assets. The depreciation methods can be selected, including the average age method (straight line method), the workload method, the double declining balance method and the annual total sum method.

Because the accelerated depreciation method can make the cost of fixed assets speeded up in the use period and get the compensation. The enterprises have less profits in the early stage and less taxes. Later profits are more and more taxes are paid, so as to achieve the benefit of the tax barrier.

Of course, for the fixed assets that are depreciated, if the enterprises need, they can also extend their useful life appropriately, but they can no longer make depreciation.

This view is representative in the textbook and literature on tax planning for fixed assets, but this view is applicable only when conditions are met.

Because accounting standards and tax laws give enterprises the right to choose fixed assets depreciation methods.

The seventeenth provision of the accounting standards for enterprises stipulates that "once the fixed assets are depreciated, they must not be changed at will."

The nineteenth provision provides that "if there is a significant change in the way expected to achieve economic benefits related to fixed assets, the method of depreciation of fixed assets should be changed."

It can be seen that depreciation methods do not change in general cases and are adjusted only when they are really necessary.

Fifty-ninth rules for the implementation of the enterprise income tax law: the depreciation of fixed assets calculated according to the straight line method is allowed to be deducted.

That is to say, when it comes to the calculation of enterprise income tax, except for other provisions of the tax law, the depreciation before tax deduction can only be the depreciation extracted by the straight-line method. The depreciation according to other methods should be deducted only after being readjusted according to the straight-line method.

This is a general requirement, and tax laws and regulations have also been applied to accelerate depreciation.

The thirty-second section of the enterprise income tax law and the ninety-eighth provision of the regulations on the implementation of the enterprise income tax law stipulate that the fixed assets and fixed assets that are in a highly vibrant and highly corrosive state due to technological progress and product upgrading can adopt the method of shortening the depreciation years or adopting accelerated depreciation.

If the method of shortening the depreciation period is adopted, the minimum depreciation period shall not be lower than 60% of the depreciation period stipulated in the sixtieth regulations of the enterprise income tax law.

The notice on the handling of income tax on accelerated depreciation of fixed assets of enterprises (national tax [2009]81 No. 1) is further clarified: according to the relevant provisions of the thirty-second section of the enterprise income tax law and the ninety-eighth regulations on the implementation of the enterprise income tax law, the main or key fixed assets owned by enterprises and used for production and operation are accelerated and depreciated.

Only fixed assets that meet the above two conditions can adopt the method of shortening the depreciation years or accelerating depreciation. Otherwise, it is not allowed to adopt the method of shortening the depreciation years or accelerating depreciation.

Specifically, it is divided into the following two situations: first, enterprises have not used fixed assets which are identical or similar to the fixed assets in the past, but there is sufficient evidence to prove that the estimated life of the fixed assets is shorter than that of the minimum depreciation period stipulated in the regulations on the implementation of the enterprise income tax law. Enterprises can adopt the method of shortening the depreciation years or accelerating depreciation for the fixed assets according to the estimated useful life of the fixed assets and the provisions of this notice.

Secondly, before the original fixed assets have not reached the minimum depreciation period stipulated in the regulations on the implementation of the enterprise income tax law,

If the same or similar new fixed assets replace the old fixed assets, the enterprise may adopt the method of shortening the depreciation years or accelerating depreciation for the new fixed assets according to the actual service life of the old fixed assets and the provisions of this notice.

If the enterprise adopts the method of shortening the depreciation years, the minimum depreciation period for the new fixed assets purchased by the enterprise shall not be less than 60% of the depreciation years stipulated in the sixtieth article of the regulations on the implementation of the enterprise income tax law; if it has been used for purchase

The minimum depreciation period shall not be lower than the minimum depreciation period specified in the regulations on the implementation of the enterprise income tax law, minus the remaining years after the useful life. The minimum depreciation period of 60%. shall not be changed once it has been determined.

If the enterprise owns and uses fixed assets that meet the conditions of shortening the depreciation years or accelerating the depreciation method, if the accelerated depreciation method is adopted, the double declining balance method or the annual sum method can be adopted.

Once the accelerated depreciation method is established, it is generally not allowed to change.

Therefore, speed up

The selection is strictly regulated. Even if we can use accelerated depreciation methods, we must make prudent decisions in the following two situations: first, the tax relief period, because the corporate income tax is currently practised at a proportional tax rate. If the enterprises are in the period of tax relief, the impact of accelerated depreciation on the enterprise income tax is negative. In the long run, not only can we not pay less tax, but we will pay more taxes.

The two is to make up for losses.

Because the tax law strictly limits the period of compensation, enterprises must make a reasonable estimation of the profit level in the following year according to their own specific circumstances, so that the profits of the same production and operation will be more substantial.

Especially for some high risk, high yield and unstable technology enterprises, it is necessary to plan rationally and avoid accelerating depreciation to bring adverse effects to enterprises.

It is worth noting that no matter what depreciation method is adopted, it must be approved by the tax department.