How to determine depreciation

Fixed assets of an enterprise are subject to wear and tear on a physical or moral basis. To find out how much expenses are required to restore or replace them, you need to determine depreciation.

Instruction manual

1

Before determining the depreciation of fixed assets, it is necessary to find out which regulatory category they relate to. For example, depreciable property of an enterprise is not land, water and other natural resources, construction in progress, securities and inventories.

2

Depreciation can be calculated in two ways: linear and non-linear. Using the linear method, calculate the total initial cost of fixed assets, multiply it by the depreciation rate and divide by 100. The depreciation rate is a certain coefficient of dependence on the useful life of a particular object.

3

The useful lives for each category of fixed assets are determined individually at each enterprise and are combined into a register, which must be signed by the managing person or group of persons and certified. Data for all categories are presented in the classification approved by the Government of the Russian Federation, and are divided into 10 groups. Keep in mind that they determine the monthly wear rate.

4

Mathematically, the depreciation rate Ha is equal to one divided by the number of months of useful use T, and is expressed as a percentage:

At = 1 / T • 100%.

5

With this in mind, depreciation can be determined using the linear method by the formula:

А = ПСос • На / 100 = ПСос / Т, where А - depreciation, ПСос - total initial amount of fixed assets.

6

As a rule, depreciation is calculated over an annual period. The non-linear method of calculation involves several different approaches: the method of reducing the balance, write-off of value by useful life, write-off of value in accordance with the growth of the volume of output.

7

According to the method of reduced balance, add the residual values ​​of all objects of depreciable property, multiply the result by the value of the depreciation rate and the acceleration coefficient. This coefficient is used in technological industries for machine tools and other equipment and is set in accordance with the legislation:

A = OSOS • Na • k / 100, where OSOS is the total residual value at the beginning of the period (year).

8

According to the method of writing off the value by the useful life, find depreciation by multiplying the total initial cost by a fraction:

A = PSos • (N1 / (N2 • (N2 + 1) / 2)), where N1 is the number of years until the end of the fixed asset's working life, N2 is the total number of working years.

9

Using the method of writing off value by volume of production, multiply the same amount by another fraction:

A = PSos • (Q1 / Q2), where Q1 is the average number of units of output per month, Q2 is the total volume of production for the period (year).