Shock Absorption Groups

Any property of an enterprise or organization is subject to depreciation, that is, attributing a portion of the value to the finished product as the fixed asset or other asset ages. In the practice of accounting, the division of property into separate depreciation groups is accepted. The allocation of a particular asset to a particular group is carried out on the basis of determining its service life.

The maximum service life of the asset is the time of its useful use, that is, the period during which the equipment is properly fulfilling its mission. The manager has the right to set this deadline independently, he fixes it in the documents when putting the asset into operation, after reconstruction or modernization, as any improvement in the state of the property, respectively, increases the useful life. The main thing is to observe the division into depreciation groups, that is, the increase in the duration of use should be within the group to which the asset was previously attributed.

If we talk about amortization of intangible assets, the determination of the service life of which is impossible, then in this situation, a ten-year period is indicated in the reporting. It is noteworthy that this period can not be longer than the expected time of the organization's functioning in the future.

So, let's list the main depreciation groups, according to which the division of assets of organizations is carried out. There are 10 groups divided by years. The first involves the inclusion of all assets with a service life of not more than two years, that is, 1-2 years inclusive. The second accordingly includes property that will last two or three years. The third group provides a time frame from three to five years also inclusive. And the fourth - more than five, but up to seven years. The fifth depreciation group involves the inclusion of assets that can function properly in the range of more than seven and up to ten years inclusive. In the sixth group, the accountant can safely attribute that property, which will last from ten to fifteen years. Seventh, respectively, fifteen to twenty years. The eighth depreciation group includes durable property that will please the head for twenty or twenty-five years inclusive. The ninth group allows a useful life of twenty-five to thirty years. Well, the last, the tenth depreciation group includes long-term assets, the useful life of which exceeds thirty years.

This division allows you to order all the assets of the enterprise and helps to make timely repairs or replacements. After the equipment has left the production activity, depreciation is suspended. There are several ways to determine the amount of monthly depreciation, the main of which is considered linear and non-linear. When determining the amount of deductions based on a linear method, the product is the product of the initial value of the asset, that is, the value of the property itself and the amount of costs for its delivery, installation, assembly, and depreciation rates that are calculated for a particular facility. If you use a non-linear method, the calculation will be made on the basis of the residual value of the property and the depreciation rate. Which way to choose, the legal entity decides independently. It can also change it at will, but not earlier than in the next reporting period.

The funds received form a single amortization fund, which further assists the enterprise in the development or expansion of its activities. So, depreciation charges are spent on the purchase of new property or other assets that replace the retired, or are invested in long-term projects. After the equipment has been disposed of, the deductions received for the entire period of its operation are compared with the original cost. Based on this analysis, dividing into depreciation groups reveals a loss or profit.