What is Accelerated Depreciation?

Accelerated depreciation refers to the government in order to encourage investment in specific industries or sectors, allowing taxpayers to withdraw more depreciation in the initial stage of the use of fixed assets in order to recover the investment in advance. Since the accumulated depreciation cannot exceed the depreciable amount of fixed assets, more depreciation in the earlier period will inevitably lead to a corresponding reduction in the amount of depreciation that can be withdrawn in the later period, and because depreciation is an expense of the enterprise, it is related to the size of the enterprise's taxable income and the The size of the corporate income tax burden is inversely proportional, so accelerating depreciation in terms of quantity cannot reduce the taxpayer's tax burden. It has the effect of delaying the tax time of the enterprise. This is similar to deferred taxes. For taxpayers, although their total tax burden has not changed, the result of the tax deferral is equivalent to receiving an interest-free loan from the government. ^[1]

Accelerated depreciation

Accelerated depreciation refers to the government in order to encourage investment in specific industries or sectors, allowing taxpayers to withdraw more depreciation in the initial stage of the use of fixed assets in order to recover the investment in advance. Since accumulated depreciation cannot exceed the depreciable amount of fixed assets, more depreciation in the earlier period will inevitably result in a corresponding reduction in the amount of depreciation that can be withdrawn in the later period. Because depreciation is an expense of the enterprise, it is related to the size of the enterprise's taxable income and The size of the corporate income tax burden is inversely proportional, so accelerating depreciation in terms of quantity cannot reduce the taxpayer's tax burden. It has the effect of delaying the tax time of the enterprise. This is similar to deferred taxes. For taxpayers, although their total tax burden has not changed, the result of the tax deferral is equivalent to receiving an interest-free loan from the government. ^[1]

Accelerated depreciation

Commercial Press

When enterprises obtain fixed assets (equipment) through external financing, using bank loans and using financial leases are two common methods. It is generally believed that compared with bank loans, financial leasing is more costly for enterprises. This is because the leasing rate is usually higher than the bank loan rate, and the financing leasing company will also charge a certain fee at the beginning of the period. However, there is one factor worth noting, that is, in the case of using a financial lease, the lessee enterprise can enjoy the accelerated depreciation discount. Because, the Ministry of Finance,

There is no theoretical difference in the depreciation method adopted by a company, because

Example 3: When the original fixed asset value of an enterprise is 1.1 million yuan, the use period is 10 years, and the estimated net residual value is 100,000 yuan. The annual profit of the enterprise that has not been deducted within 10 years remains at 200,000 yuan. If the country implements

According to Article 5 of the Statement of the State Administration of Taxation on the Issues Concerning the Accelerated Depreciation Income Tax Treatment of Fixed Assets of Enterprises (Guo Shui Fa [2009] No. 81), if the enterprise really needs to adopt a shortened depreciation period or accelerated depreciation method for fixed assets, Within one month after obtaining the fixed asset, it shall be filed with its competent corporate income tax authority (hereinafter referred to as the competent tax authority) and submit the following materials:

1. The function of fixed assets, the estimated useful life is shorter than the reasons for the calculation of the depreciation minimum period stipulated in the "Implementation Regulations of the Enterprise Income Tax", the certification information and the explanation of relevant circumstances;

2. Explanation of the function, use and disposal of the old fixed assets being replaced;

3. Explanation of the method and depreciation amount to be used for accelerated depreciation of fixed assets;

4. Other materials required by the competent tax authority.