What is the depreciation of machinery and equipment?
Depreciation of machinery and equipment, especially those used in agriculture, is the depreciation of goods used in rural business that end up wearing out over time or by exchanging the good for another more technological one.
Why is calculating the depreciation of machinery and equipment important?
The calculation of depreciation brings to the Rural Producer several benefits such as stability and financial security, in case the fixed asset needs repair or exchange. With this calculation, the producer can verify what the final cost of the product will be to make the decision whether it is time to replace it. With this, an investment strategy can also be made in the company, so that the assets are not exposed to high levels of depreciation.
What is the difference between tax depreciation and book depreciation?
Tax depreciation is for compliance with the Tax Authorities, and must strictly follow IN 1700/17 - Annex III, whose rate in general for machinery and equipment is 10% per year. In accounting depreciation, it is established over the useful life, which reflects the wear and tear of the asset given as collateral, taking into account the given operating conditions on the property. The objective of CPC 27 and of the international accounting standards (IFRS) is that the depreciation of fixed assets represents the closest possible to the reality given to the operating conditions of the assets.
How to calculate depreciation?
The calculation of the depreciation rate of machinery and equipment has the following formula:
Annual depreciation = (acquisition cost – residual value) / years of useful life.
To perform this calculation, we used the acquisition value, which is identified by the purchase note, and the residual value, together with the years of useful life, which are estimated values. In addition to the straight-line method, the calculation of depreciation of the most used assets considers the characteristics and type of use of each asset using the hours of work and the units produced.
Article 57 of Law 4,506/64
This article deals with the decrease in the asset's asset value, caused by wear and tear or another factor impacting this result, which can be computed as a cost. It is important to emphasize that under no circumstances will the accumulated amount of depreciation quotas exceed the cost of acquisition of the asset. In addition, the quota is deductible from the moment the good is put into service or installed by the property.
How many years do you depreciate machinery and equipment?
The percentage of depreciation of an asset is estimated as a result of the time of its use, with the depreciation limit being its own value. This control must be individualized and stipulated by the asset, so that in the property, plant and equipment spreadsheet the recorded value pertaining to depreciation does not exceed the value of the asset.
Depreciation of an asset starts when it starts operating and ends when it is derecognized or transferred. Depreciation rates are fixed through the Normative Instruction of the Federal Revenue Service and vary according to the nature of the asset and what it was used for during its useful life. Among them, we can mention:
Buildings (4%);
Installations (10%);
Furniture and utensils (10%);
Machinery and equipment (10%);
Tools (15%);
Vehicles (20%);
Trucks (20 to 25%);
IT equipment (20%);
Communication equipment (20%).
Depreciation Calculation Tools
There are several software on the market to calculate the depreciation of machines and equipment. From simple Excel spreadsheets to online tools, depreciation tables and ready-made depreciation calculation spreadsheets.
