Tutorial 2 Ways of accounting for depreciation of fixed assets correctly

Posted on by Mai Hương

Accounting for depreciation of fixed assets is an integral part in the assessment of the real value of the property, to help businesses build strategic financial sustainability. This article Accnet will provide detailed information on how accounted for, the important note when accounting for wear and tear of fixed assets, help businesses understand, apply properly to optimize accounting and asset management.

1. The concept of accounting for depreciation of fixed assets

Wear and tear of fixed assets is a gradual reduction of the use value of the property over time due to the influence of the use, natural wear and tear or obsolescence of technology.

In accounting, accounting for wear and tear of fixed assets is the process of recorded cost of wear and tear to reflect the remaining value of the property on bookkeeping

Accounting for wear and tear of fixed assets bring in many benefits important for the business, including:

  • To help businesses capture the actual value of fixed assets
  • Ensure the implementation of accounting in accordance with the provisions of The state and the accounting standards the international.
  • Provide accurate data to build financial strategies, optimize resources.
hạch toán hao mòn tài sản cố định

2. Instructions on how accounting for wear and tear of fixed assets

In accounting for depreciation of fixed assets, the following account will be used:

  • TK 211 - fixed Assets tangible: Reflects the original cost of fixed assets tangible.
  • TK 213 - fixed Assets intangible: Reflect the original cost of fixed assets invisible.
  • TK 214 - Depreciation of fixed assets: Reflects depreciation accumulated of fixed assets.

Expense accounts:

  • TK 627 - Cost production general: when fixed assets production service.
  • TK 641 - Cost of sales: Used when fixed assets sales service.
  • TK 642 - Cost management business: for fixed asset management.

The following are detailed instructions, steps, pencil algorithm, illustrative examples, and the required note.

2.1. Accounting for wear and tear of fixed assets after depreciation of tangible fixed assets bank

When depreciation value will be recorded at the cost of parts, use the property. Specific:

  • Debt TK 627 (production Costs, general): If the asset production service.
  • Debt TK 641 (Cost of sales): If asset sales service.
  • Debt TK 642 (Cost management business): If the property management service.
  • Have TK 214 (wear and tear of fixed assets): Recorded depreciation.

For example, the Business purchased a machinery manufacturer has its price 600.000.000 copper.

  • Duration of use: 10 years.
  • Depreciation method: straight line.
  • The machine is used for production.
  • Depreciation monthly: 5,000,000

Journal:

  • Debt TK 627: 5.000.000
  • Have TK 214: 5.000.000

2.2. Liquidation or sale of fixed assets

Accounting for wear and tear of fixed assets upon liquidation or sale of fixed assets needs to be carried out:

Delete the wear and tear accumulated:

  • Debt TK 214 (wear and tear of fixed assets): depreciation accumulated.
  • Have TK 211/213 (fixed assets tangible/intangible): Original price of the property.

To handle the difference:

  • If there is interest: There are TK 711 (other income).
  • If the hole: Debt TK 811 (other Costs).

Recognition of expenses and income incurred:

  • Debt TK 811: the Cost of liquidation, or holes.
  • Have TK 711: income from the liquidation or sale.

For example: Business liquidation of a machine has its price vnd 500,000,000.

  • Wear and tear accumulated up to the time of liquidation: the 400,000,000 coins.
  • The cost of liquidation: 10,000,000.
  • Price earning: 50,000,000.

Journal:

Delete original price and the wear and tear accumulated:

  • Debt TK 214: the 400,000,000
  • Debt TK 811: 100.000.000 (value yet remaining depreciation)
  • Have TK 211: 500.000.000

Recorded costs of liquidation:

  • Debt TK 811: 10.000.000
  • Have TK 111/112: 10.000.000

Recorded income from disposal:

  • Debt TK 111/112: 50.000.000
  • Have TK 711: the 50,000,000

2.3. Note when accounting for wear and tear of fixed assets

  • Determine the exact assets not depreciated: Land or fixed assets are allocated.
  • Allocate a reasonable cost: Based on department use of property.
  • Compliance period, depreciation method: As specified in circular 45/2013/TT-BTC.
Read more other articles related to accounting assets:

3. Legal basis and rules of accounting for depreciation of fixed assets in Vietnam

3.1. Circulars and regulations

In Vietnam, accounting for wear and tear of fixed assets is made according to the legal regulations closely, including:

  • Circular no. 200/2014/TT-BTC: manual mode, business accounting, including how recorded, accounting for wear and tear of fixed assets.
  • Circular 45/2013/TT-BTC: Regulations on management mode, use and depreciation of fixed assets.
  • The law on Vietnamese accounting: refers to the principles, basic accounting, including management, record wear and tear of fixed assets.

3.2. The standard international accounting related (IAS 16, IAS 36) when accounting for wear and tear of fixed assets 

In addition to the regulations in the country, many Vietnamese enterprises apply the accounting standards international as:

  • IAS 16 - Property, Plant, and Equipment: Rules of recognition, measurement, depreciation of fixed assets.
  • IAS 36 - Impairment of Assets: refers to the reduction in property value when the residual value exceeds the recoverable value.
hao mòn tài sản cố định

4. The common errors in accounting for depreciation of fixed assets

4.1. The common errors

Businesses often have a number of common errors in accounting for wear and tear, including:

  • Misjudge the real life of the property leads to the calculation of wear and tear are not correct.
  • Apply methods not consistent with the nature of the property.
  • Not timely updates led to the financial statements do not reflect the true value of the property.

4.2. How to fix effective when the error accounting for the wear and tear of fixed assets 

  • Build process inventory of the property which states: Help to accurately determine the value, condition of the property.
  • Software applications accounting: The modern software supports auto-calculating amortization, warning, error.
  • Training accounting personnel: Ensure accounting team understood the rules, method of accounting.

5. Solutions to improve efficiency accounting for wear and tear of fixed assets for business

The application of the solution advanced software to help businesses automate the process of accounting for depreciation of fixed assets, minimize errors, improve efficiency, asset management.

hao mòn tài sản cố định

Phần mềm nổi bật nhất hiện nay trên thị trường chính là Accnet Tài sản, với các ưu điểm:

  • Features automatic calculation of wear and tear according to the various methods: straight line, declining balance, output.
  • Detailed reports on the condition of the property value also strange, the cost of wear and tear each states.
  • Friendly interface, easy to use, fits both small and large business.
  • Centralized management of the entire information about fixed assets, from acquisition, use, to disposal.
  • Alerts when there are errors in recorded or timeless useful use.
  • Sync data with other parts, to ensure accurate information.

PHẦN MỀM ACCNET TÀI SẢN

Phần mềm Accnet Tài sản solution provider of professional business support, manage, track, optimize performance, use the comprehensive property.

Benefits highlights:

  • Manage the entire property information
  • Supports calculate asset depreciation accurate
  • Scheduling maintenance, repair, property alerts, timely 
  • Provide detailed reports on value, performance, usage history, property
  • Connect sync with accounting software and the other management system

Phần mềm Accnet Tài sản – comprehensive solutions to help businesses optimize asset management, reduce costs, improve the efficiency of use. Software experience today!

Hạch toán hao mòn tài sản cố định là một phần quan trọng trong quản lý tài sản, lập báo cáo tài chính của doanh nghiệp. Việc áp dụng đúng quy trình, phương pháp, các giải pháp hiện đại giúp doanh nghiệp tối ưu hóa hiệu suất. Hãy để các giải pháp kế toán thông minh đồng hành cùng doanh nghiệp của bạn! Liên hệ ngay Lạc Việt để trải nghiệm phần mềm quản lý tài sản doanh nghiệp Accnet Tài sản – công cụ hỗ trợ quản lý tài sản hàng đầu hiện nay.

CONTACT INFORMATION:
  • THE COMPANY SHARES INFORMATION, LAC VIET
  • 🏢 Head office: 23 Nguyen Thi huynh, Ward 8, Phu Nhuan District, ho chi minh CITY.CITY
  • ☎️ Hotline: 0901 555 063 | (+84.28) 3842 3333
  • 📧 Email: info@lacviet.com.vn
  • 🌐 Website: https://accnet.vn/
Mai Huong
Have censored content

The editor for the accounting of Vietnam with over 5 years of experience. Stand out with the ability to analyze profoundly the accounting regulations, tax policies, standards financial statements. Read more >>>

Theme: