Financial Treatment: Accounting And Tax Treatment For "Dismantling"

The enterprise purchased a set of generating units three years ago. Now we need to replace the old "runner" with the new "runner". According to the requirements of the accounting standards, the original value and accumulated depreciation of the old "runner" should be calculated. When the enterprise originally purchased the generating set, the supplier did not provide a list of the spare parts of the spare parts. Now, how can the company reasonably determine the original value and accumulated depreciation of the spare parts being dismantled?

Many enterprises, as long as they dismantle spare parts on fixed assets, deal with capitalization, regardless of whether the amount of spare parts being dismantled satisfies the standard of "capitalization". There are defects in the replacement of spare parts, that is, capitalized accounting.

1., the accounting work of enterprises has become very complicated. The list of workload increases: the increase of original value, the reduction of original value, the reduction of accumulated depreciation, the adjustment of fixed assets cards, the reduction of taxable income when the enterprise income tax returns, and the confirmation of the deferred income tax arising from the difference between the book value of assets and the tax base.

2., it does not meet the accounting standards. Only when new spare parts meet the capitalization standard, can the original value of the spare parts be removed and the original original value reduced, the original value being removed as the new original value.

This kind of treatment is applicable to listed companies that are eager for performance, state-owned enterprises with managerial indicators, and managers' management enterprises. Corporate income tax Cut, net profit is plentiful.

Relevant provisions:

1. Accounting Standard No. fourth - Fixed Assets

The subsequent expenditures for renewal and spanformation of fixed assets, which satisfy the conditions for confirmation of the fourth provision of this standard, shall be included in the cost of fixed assets. If there is a replacement part, the book value shall be deducted; the repair cost of fixed assets, which does not meet the conditions specified in the fourth clause of this standard, shall be included in the current profits and losses at the time of occurrence.

Only when fourth fixed assets meet the following conditions can they be confirmed:

(1) the economic benefits related to the fixed assets are likely to flow into the enterprise;

(two) the cost of the fixed assets can be measured reliably.

2. enterprise income tax law

Thirteenth in calculating the taxable income, the following expenses of the enterprise shall be deducted as long as the prepaid expenses are amortized according to the provisions:

(1) fixed assets that have been fully extracted from depreciation. Reconstruction expenditure ;

(two) refinancing expenditures for renting fixed assets;

(three) expenditures for heavy repair of fixed assets;

(four) other expenses should be paid as long term expenses.

3. regulations on the implementation of the enterprise income tax law

The sixty-ninth major repair expenses for fixed assets mentioned in item thirteenth (three) of the enterprise income tax law refer to expenditures that meet the following requirements simultaneously:

(1) the amount of repair tax to achieve fixed assets is more than 50% of the tax base.

(two) the life span of fixed assets after repair has been extended for more than 2 years.

The expenditure stipulated in item thirteenth (three) of the enterprise income tax law shall be amortized according to the useful life of fixed assets.

4. the Announcement No. of the State Administration of Taxation on certain issues concerning enterprise income tax: Announcement No. thirty-fourth of the State Administration of Taxation on 2011

　　 About buildings and buildings fixed assets Tax treatment for extension and extension

The original value of the asset shall be deducted from the net value after the depreciation, and it should be incorporated into the fixed assets tax cost after the replacement, and the depreciation shall be made in accordance with the depreciation period stipulated by the tax law after the fixed assets are put into use. If the function of upgrading or increasing the area is taken into account, the expenses for the extension and expansion of the fixed assets shall be incorporated into the tax base of the fixed assets, and the depreciation period of the fixed assets shall be depreciated according to the fixed assets depreciation period stipulated by the tax law from the next month after the completion of the extension and completion of the fixed assets. If an enterprise rebuilds and expands the fixed assets of buildings or buildings before the full amount of the depreciation is extracted, if it belongs to the collapse,

Risk warning:

1.. For the large machinery and equipment frequently purchased, the latest quotations for the replacement date of the same type of equipment, the latest quotation of the dismantling parts, the "zero integral ratio" of the fittings and the overall equipment (the total value of the parts and the multiple of the overall equipment) can be obtained; if there is no identical type of equipment, the quotation of similar equipment and accessories with the same function can be quoted.

2. the original value of the demolition accessories = the original value of the equipment account (* the latest quotation of the demolition accessories / the latest price list of the whole equipment / zero integer ratio).

3. the total depreciation of the disassembly parts = the total depreciation amount of the equipment (* the latest quotation of the demolition accessories / the latest price list of the whole equipment / zero integer ratio).

4., if the standard of fixed assets fixed by the enterprise is determined to be larger than 50% of the original value of the fixed assets, and the useful life will be more than two years and the net residual value is zero, the cost of the above repair will be reported as "depreciation" in the financial statements, and it should be adjusted to "amortization of long term prepaid expenses" on the enterprise income tax return. Although the cost items of the financial treatment and tax treatment are different, the profits and losses will not be affected. If there is any difference between the above accounting policies and taxes, tax adjustments will be required.

The above fourth items also apply to the replacement of ancillary equipment in housing repairs.

5., if the property is to be demolished and rebuilt, the accounting will be cleared according to the value of the house, while the tax law requires the value of the house to be demolished to be fully included in the value of the new property. Therefore, the property losses recognized in the current accounting books need to be paid in full at the time of the enterprise income tax declaration.