What Should I Consider When Donating a Car?

Acceptance of donated fixed assets refers to the acceptance of donated items that meet the standards of fixed assets. Accepting donations of fixed assets is a unilateral act, and often there is no cost involved. For this part of the assets, the commonly used method is to use the assessed fair value as the basis for accounting, or the original document provided by the donor as the basis for accounting. According to China's accounting standards, if a donor accepts donated fixed assets, if the donor provides relevant vouchers, the amount indicated on the voucher plus the relevant taxes and fees should be paid as its account value. Asset market price assessment and valuation, or based on the present value of its estimated future cash flow, old assets can be considered on the basis of the above new and old degree, and recorded at a discounted value.

Accept donations of fixed assets

Right!

Accepting donated fixed assets means

(1) Determination of the cost of receiving fixed assets ^[1]

The accounting entries for receiving donated fixed assets are: ^[2]

Borrow: Fixed assets (determined book value)

Loans: Deferred Taxes

Capital reserve

Bank deposits (relevant taxes payable)

Article 24 of the "State Administration of Taxation's" Pre-tax Deduction Measures for Corporate Income Tax "stipulates that fixed assets and intangible assets that are donated by enterprises are not allowed to accrue depreciation or amortization expenses. According to the accounting system, fixed assets should be depreciated. This results in inconsistencies between the tax law and the accounting system, which must be adjusted by deferred taxes in accounting. This is the same as the accounting treatment and reasons for accepting donated raw materials and other inventory.

[Now an example] A company accepts a donation of one fixed asset with a value of 1 million yuan. Assuming that depreciation is provided for 10 years, regardless of residual value and cleaning costs, the income tax rate is 33%. Except for depreciation, the company has no other tax adjustments.

When the enterprise accepts donations, the accounting entries are:

Borrow: 1000000 fixed assets

Loan: Deferred tax 330000

Capital reserve 670000

When depreciation is made each year, the accounting entries are:

Borrow: manufacturing cost (or other) 100000

Credit: Accumulated depreciation of 100,000

The taxable income of an enterprise is:

Accounting profit + items or expenses that are not allowed to be deducted = 1000 + 10 = 1010 (ten thousand yuan)

Income tax payable = taxable income × tax rate = 1010 x 33% = 3.333 million yuan

When an enterprise calculates and pays income tax, the accounting entries are:

Borrow: Income tax 3300000 (10000000 × 33%)

Deferred tax 33,000 (100000 × 33%)

Loan: Tax payable-income tax payable 3333000

The last deferred tax of 330,000 yuan was amortized over 10 years to adjust the difference between the accounting profit and the income tax paid based on the taxable income.

If the company does not accept donations or does not accrue depreciation in accounting, the accounting profit is 1000 + 10 = 10.1 million yuan, the taxable income is consistent with the accounting profit, and the income tax payable is 10.1 million yuan × 33% = 3.333 million yuan, and The same amount of income tax is payable when accepting donations and depreciation. It can be seen that the acceptance of donations through the "deferred tax" account did not increase or decrease the tax payable, but also linked the accounting system requirements with the tax law.

Accounting treatment of fixed assets donated by foreign-funded enterprises

The accounting treatment and tax treatment of foreign-invested enterprises receiving donated assets have maintained a high degree of consistency. The "Notice on Tax Treatment of Donations Accepted by Foreign-Invested Enterprises and Foreign Enterprises" (Guo Shui Fa [1999] No. 195) stipulates that fixed assets that accept donations at institutions and venues established by foreign-invested enterprises and foreign enterprises in China shall be subject to reasonable prices. The valuation is included in the relevant asset items, and is also used as the current year's income of the enterprise. After making up for the losses incurred in the previous year, the corporate income tax is calculated and paid. If the balance after making up the previous year's losses is large and the enterprise has difficulty paying the tax at one time, upon application by the enterprise and approval by the local competent tax authority, it can be included in the average taxable income of the enterprise within a period not exceeding 5 years. ^[3]

In terms of accounting, the new system retains the provisions of the Notice on Printing and Distributing the Provisions on Accounting Treatment of Foreign-funded Enterprises Purchasing Domestic Equipment Tax Refunds and Accepting Donations (Cai Cai Zi [2000] No. 005), clarifying the fixed assets for foreign-invested enterprises to accept donations , According to the following methods: the fixed assets of the enterprise accepting donations should be added to the "value of donated assets to be transferred" account, to calculate the value of fixed assets of the enterprise to receive donations to be transferred.

1. For fixed assets donated by enterprises, debit the "fixed assets" account, credit "value of donated assets to be transferred", "bank deposits", etc. according to the market price of similar assets or the value determined by relevant evidence and related expenses incurred. subject.

2. At the end of the year, the enterprise should debit the account value of the "value of donated assets to be transferred" account, debit the "value of donated assets to be transferred" account, and pay the income tax payable on the fixed assets that donate (or the fixed assets that accept donations to make up for losses) Calculate the income tax payable after the difference, the same below), credit the "Tax payable-income tax payable" account, the difference between the value of the fixed assets received after deducting the payable income, credit "Capital reserve "subject.

3. If the fixed asset donation accepted by the enterprise after making up for the loss is large, and approved to be included in the enterprise's taxable income and pay income tax on average within a period of not more than 5 years, the enterprise should end the year and transfer it as The value of taxable income is debited to the "value of donated assets to be transferred" account, and the "tax payable-income tax payable" account is credited according to the income tax payable in the current period, which is deducted based on the value of the taxable income transferred The balance of income tax payable in this period is credited to the "capital reserve" account.

The above accounting treatment regulations are not comprehensive enough, mainly reflected in the fact that the amount of income tax payable after year-end liquidation is less than zero. In order to facilitate the operation, the accounting treatment method is exemplified in accordance with the characteristics of the business and the above-mentioned regulations.

[Example] On September 1, 2000, a foreign-invested enterprise accepted a donation from a unit with a value of RMB 500,000 and no other expenses incurred. The accounting treatment is as follows:

(1) When receiving the donated equipment:

Borrow: 500,000 fixed assets

Loan: donated assets worth 500,000 to be transferred

(2) At the end of the year, the value of the donation received by the enterprise is included in the current year's income. The business should adjust the taxable income amount of 500,000 yuan, and treat it as follows according to the adjusted taxable income situation:

The taxable income is greater than 500,000 yuan. If the adjusted taxable income is 600,000 yuan, the enterprise income tax shall be 198,000 yuan (600,000 × 33%) in accordance with the regulations. The entry is as follows:

Borrow: 500,000 worth of donated assets to be transferred

Loan: Tax payable-Income tax payable 165,000 (500000 × 33%) Capital reserve-Other capital reserve 335000

Simultaneously:

Borrow: Income tax 33000

Loan: Tax payable-income tax payable 33,000 (600000 × 33% -165000)

The taxable income is equal to 500,000 yuan, the same as the first entry.

The taxable income is less than 500,000 yuan and greater than 0. If the adjusted taxable income is 400,000 yuan, the enterprise income tax shall be 132,000 yuan (400000 × 33%).

Borrow: 500,000 worth of assets to be transferred

Taxes payable-income tax payable 132000

Capital reserve-other capital reserve 368000

The adjusted taxable income is less than 0.

Borrow: 500,000 worth of donated assets to be transferred

Loan: Capital reserve --- other capital reserve 500,000

In this example, if the enterprise is approved by the local competent tax authority and allowed to be included in taxable income on average within 5 years, then the amount of taxable income included in the annual tax is 100,000 yuan (500000/5 = 100000). At the time of processing, the amount of the "value of donated assets to be transferred back" is 100,000 yuan each year, and its accounting treatment method remains unchanged.