According to Russian legislation, organizations have the right to independently choose the method by which they will account for depreciation of fixed assets. The simplest is considered to be linear, but for many enterprises it is more profitable and convenient to write off most of the costs of equipment in the first years of its operation to wear and tear. This can be done using non-linear methods, in particular, calculating depreciation using the reducing balance method.

The feasibility of writing off cost using the reducing balance method

The non-linear method of writing off depreciation of property involves uneven repayment of its value over the entire useful life. The declining balance method makes it possible to implement accelerated depreciation by applying an acceleration factor. The owner of the property has the right to set this indicator in the range of 1–2.5, and for property leased, the wear rate can be increased by 3 times. In practice, this means that the organization recovers the bulk of the costs of purchasing equipment while it is still relatively new.

Keeping records and making contributions to the depreciation fund in this order is most advisable when it comes to property that is significantly losing productivity every year. Having exhausted a certain resource, the equipment requires more and more investments in maintenance and repair, its efficiency decreases, despite the fact that formally the service life of the fixed asset has not yet expired. In other words, the profit from the operation of this property begins to decrease. In such cases, it is in the interests of the owner to write off the purchase costs as soon as possible and be able to renew fixed assets from the depreciation fund.

However, non-linear repayment of value is not always possible. This method cannot be used for property related to:

• to unique equipment for certain types of production;
• to equipment and machinery with a useful life of less than 3 years (1–2 depreciation groups);
• to passenger cars (except for taxis and company cars);
• to the office environment;
• to buildings and a number of other objects included in groups No. 8–10, according to the classification of fixed assets by useful life.

How to calculate depreciation using the reducing balance method?

Already from the name of the method - “diminishing balance” - it becomes clear that the calculation will be based on the residual value of the object, equal to the initial costs of its acquisition and commissioning minus the accruals already paid off at the beginning of the reporting period.

The second indicator that is necessary for calculations is the depreciation rate. It is determined based on the useful life of the property. The depreciation rate is calculated as 100% / n (n is the service life in years or months, depending on the period for which the calculation is made).

The third component of the formula is the acceleration coefficient, which the enterprise sets independently and records in the accounting policy of the accounting department.

The formula itself looks like this:

A = Co*(K*Ku) / 100, where

A – write-off amount;

Co – residual value of the object;

K – wear rate;

Ku is the acceleration coefficient.

Let's look at an example of how to calculate depreciation using the reducing balance method.

Initial data:

• the amount spent on the acquisition of fixed assets is 50,000 rubles;
• useful life – 5 years;
• The acceleration factor established by accounting is 2.

You can calculate the amount of depreciation in two ways: using the monthly rate (convert the service life into months) or by calculating the annual rate and then dividing the resulting amount by 12.

For calculations, you will need figures for both the year and the month, since depreciation charges are made monthly, but the annual amount of depreciation is necessary to determine the residual value of the object.

Let's start by determining the depreciation rate. It will be 20% per year (100%/5 years), or 1.67% per month (20%/12 months or 100%/60 months). We take into account the accelerated depreciation coefficient (Ku=2) and get the wear rate for the year - 40% (3.34% per month).

Depreciation using the reducing balance method is calculated separately for each year:

1. In the first year, the residual value is equal to the original value. The write-off amount will be: 50,000 * 40 /100 = 20,000 rubles. Or 1670 monthly.
2. We begin calculating depreciation for the second year of operation by determining the residual value: 50,000 – 20,000 = 30,000 rubles. Using our formula, we calculate the annual amount of depreciation: 30,000 * 40/100 = 12,000 rubles. (1000 per month).
3. We calculate the amount of deductions for the third year in a similar way: (30,000–12,000)*40/100 = 7,200 rubles/year or 600 rubles. / month.
4. As of January of the fourth year of use, the remainder of the initial costs of purchasing the object is already 10,800 rubles. (18000–7200). Accordingly, A = 10800*40/100 = 4320 rubles. (monthly - 360).
5. At the beginning of the fifth year, the residual value is 10,800 – 4,320 = 6,480 rubles. This amount is 13% of the price of the fixed asset recorded when placing it on the balance sheet. It’s worth stopping here and turning to tax legislation. According to Art. 259 of the Tax Code of the Russian Federation, at the moment when the book value of property reaches 20% of the original amount, the procedure for calculating depreciation changes. In order to maintain a monthly repayment schedule for depreciation charges and write off the incurred costs for the facility in full, the balance is distributed according to the number of months until the end of its service life. That is, we divide 6480 by 12 months and get the amount of monthly depreciation in the last year of useful use - 540 rubles.

Thus, throughout the entire life of the asset, its book value is reduced by the amount of depreciation until it reaches zero.

It is worth noting that having chosen the reducing balance method as a method of writing off depreciation, it must be used for the entire service life of the fixed asset: from the moment the object is capitalized (starting from the 1st day of the next month) until the end of depreciation charges. The basis for stopping the accrual of depreciation is the full repayment of the value of the property or its removal from the organization’s balance sheet.

Repaid at an accelerated pace.

What is the reducing balance method of depreciation?

Essence of the method

To correctly calculate or, a method based on decreasing the remainder is also used. This technique is used when property decreases in value unevenly over time. Moreover, the largest share of the cost is given in the first years of its operation.

These primarily include those objects that were created through the investment of a large amount of intellectual labor, that is, when using them, there is a significant excess of moral damage over physical damage.

In other words, the object can still be used further, since it has not physically deteriorated, but as a result its use for practical purposes is impractical and ineffective.

In this case, to write off the cost of highly intelligent objects, a method based on reducing the balance is used, thanks to which you can apply. For this, a special acceleration coefficient will be used, the range of which varies between 1-2.5. In some cases, this coefficient can be increased to 3, for example, when concluding a contract for, that is. The economic meaning in this case comes down to the fact that the enterprise quickly recovers the costs of a fixed asset or intangible asset while they are still relatively modern or new.

The reducing balance method is discussed in this video:

Legislation on this issue

The fact that the reducing balance method can be used to calculate depreciation is indicated in clause 3 of PBU 6\01 “Accounting for fixed assets”, approved by Order of the Ministry of Finance of Russia dated March 30, 2001 No. 26n and clause 4 of PBU 14/2007 “Accounting for intangible assets” ", approved by Order of the Ministry of Finance of the Russian Federation dated December 27, 2007 No. 153n.

According to these documents, calculations using this method are carried out as follows:

1. . The calculation of annual deductions involves either the original cost minus depreciation at the beginning of the year, multiplied by the rate of depreciation deductions. This norm is calculated according to. In addition, for the calculation it can also be used, by which the established one is multiplied;
2. . The calculation of monthly deductions is based on the residual value or original cost minus depreciation at the beginning of the month, multiplied by a special acceleration factor and divided by the object in months.

Reflecting depreciation in a similar way in 1C is shown in the video below:

Calculation formula and example

In order to clearly understand exactly how depreciation is calculated using the declining balance method according to fixed assets and, we will define the formula for the calculation and give a specific example of its use.

According to PBU 6/01, the amount of depreciation charges for fixed assets for the year will be equal to: A = Os * K / SPE, Where:

• A - depreciation for the year;
• K is the acceleration coefficient adopted in the organization (no more than 3);
• SPE is the useful life of the facility (in years).

Then the annual period is divided into 12 months.

In accordance with this formula, we will solve a specific example:

In January 2016, the Perspektiva company received high-tech equipment worth 1.5 million rubles. The organization uses an acceleration coefficient whose value is 2. The useful life of the object is 10 years. We use the following table:

Year of calculation	Cost of the object at the beginning of the period, rub.	Residual value (calculation method)	Calculation of monthly depreciation amount	Amount of monthly depreciation, rub.	Amount of annual depreciation, rub.
02.16 -	1 500 000,00	-	1 500 000,00 * 2 / 10 /12	25 000,00	275 000,00
01.17 -	1 225 000,00	1 500 000,00 - 275 000,00	1 225 000,00 * 2 / 10 /12	20 416,67	245 000, 04
01.18 -	979 999,96	1 225 000,00 - 245 000,04	979 999,96 * 2 / 10 /12	16 333,33	195 999,96
01.19 -	784 000,00	979 999,96 - 195 999,96	784 000,00 * 2 / 10 /12	13 066,67	156 800,04
01.20 -	627 199,96	784 000,00 - 156 800,04	627 199,96 * 2 / 10 /12	10 453,33	125 439,96
01.21 -	501 760,00	627 199,96 - 125 439,96	501 760,00 * 2 / 10 /12	8 362,67	100 352,04
01.22 -	401 407,96	501 760,00 - 100 352,04	401 407,96 * 2 / 10 /12	6 690,13	80 281,56
01.23 -	321 126,40	401 407,96 - 80 281,56	321 126,40 * 2 / 10 /12	5 352,11	64 225,32
01.24 -	256 901,08	321 126,40 - 64 225,32	256 901,08 * 2 / 10 /12	4 281,68	51 380,16
01.25 -	205 520,92	256 901,08 - 51 380,16	205 520,92 * 2 / 10 /12	3 425,35	41 104,20
01.26 -	164 416,72	205 520,92 - 41 104,20	164 416,72 * 2 / 10 / 12	2 740,28	2 740,28
TOTAL	-	-	-	-	1 338 323,52

As can be seen from the above example, after the end of the useful life of the object, there is a part of the residual value in the amount of 161,676.48 rubles, which was not written off. In this case, Perspektiva LLC can proceed in one of the following ways:

• include this entire amount as depreciation charges in the month following the useful life, and in this case it will be February 2026;
• include this amount in depreciation for 2026, that is, in our case it is only in January 2026. If the object, for example, was purchased not in January, but in June, then the residual value could be included proportionally in all 5 months 2026, that is, 32,335.30 rubles. monthly;
• continue to accrue depreciation after January 2026, accruing RUB 2,740.28 monthly.

For intangible assets, the formula has the same form, only depreciation and useful life are calculated in monthly terms.

Let's consider a specific example of calculating depreciation on an intangible asset.

In September 2017, Perspektiva LLC received a computer program worth 74 thousand rubles. The organization uses an acceleration factor of 2. The useful life is 7 months. To calculate the monthly depreciation amount, we present the following table:

Month	The cost of the object at the beginning of the month,	Residual value (method Calculation)	Determination of monthly depreciation amount	Amount of depreciation per month,
October 2017	74 000,00	-	74 000,00 *	21 142,86
November 2017	52 857,14	74 000,00 - 21 142,86	52 857,14 *	17 619,05
December 2017	35 238,09	52 857,14 - 17 619,05	35 238,09 *	14 095,24
January 2018	21 142,85	35 238,09 - 14 095,24	21 142,85 *	10 571,43
February 2018	10 571,42	21 142,85 - 10 571,43	10 571,42 *	7 047,61
March 2018	3 523,81	10 571,42 -	3 523,81 *	3 523,81
April 2018	-	3 523,81 -	-	-
May 2018	-	-	-	-
TOTAL	-	-	-	74 000,00

This table shows that using depreciation charges and the acceleration factor, the cost of an intangible asset was written off in 6 months with its useful life of 7 months.

Even more information about the reducing balance method is presented in this video:

Depreciation is calculated based on the residual value of the fixed assets at the beginning of each reporting year and the depreciation rate. The norm is determined based on the useful life of the fixed assets and the acceleration factor, which cannot be higher than 3. This is stated in paragraph 19 of PBU 6/01 (approved by Order of the Ministry of Finance of Russia dated March 30, 2001 N 26n).

Accelerated depreciation can also be used when leasing, if the fixed assets are listed on your balance sheet. For movable property that belongs to the active part of fixed assets, an acceleration factor of up to 3 can be applied (Letter of the Ministry of Finance of Russia dated March 3, 2005 N 03-06-01-04/125).

When calculating depreciation reducing balance method according to clause 19 of PBU 6/01, the annual amount of depreciation is calculated based on the residual value of the fixed assets object at the beginning of the reporting year, the depreciation rate calculated based on the useful life of this object and the acceleration factor established in accordance with the legislation of the Russian Federation. During the reporting year, depreciation charges are made monthly in the amount of 1/12 of the annual amount.

Where WITH ost– residual value of the object;

To– acceleration coefficient;

N A– depreciation rate for a given object.

At the moment, the acceleration coefficient in Russia is not established by law. Therefore, it is taken equal to one, that is, it does not participate in the calculation. In such a case, the company determines the procedure for repaying the remaining value of the object independently, fixing it in its accounting policy (clause 7 of PBU 1/2008). In the last year of use of the object, the residual value can be written off or depreciation can continue to be charged.

For example, an enterprise bought a machine, the cost of which is 120,000 rubles, the service life is 8 years. The acceleration factor is 2. Thus, the annual depreciation amount, taking into account acceleration, will be 25% (100%: 8 × 2). The calculation of depreciation is presented in the table:

Table 2.2.1 Calculation of depreciation using the reducing balance method

	Residual value at the beginning of the year (RUB)	Depreciation rate, %	Amount of annual depreciation (RUB)	Residual value at the end of the year (RUB)

It should be noted that with this method the original cost will never be written off. In this example, in the last year of depreciation, there is a balance of 12,013 rubles. Despite this drawback,

The method allows you to write off the maximum depreciation value in the first years of operation of the asset. Thus, the enterprise has the opportunity to most effectively reimburse the costs of acquiring fixed assets.

With the declining balance method, the annual depreciation rate is determined as the reciprocal of the standard service life or useful life of the object multiplied by the acceleration factor (up to 2.5 times) specified in the Inventory card:

where T is the useful life established by the organization for this fixed asset;

K – acceleration coefficient (up to 2.5).

With a constant acceleration coefficient (K), the annual depreciation rates are constant.

At the end of the i-th year, the cost of the object is calculated using the formula

. (5.7)

The amount of depreciation in the i-th year is determined by the following formula

, (5.8)

where H a is the depreciation rate, %

Calculation example

The depreciable cost of a universal milling machine is CU 4,000, its useful life is 6 years. Depreciation is calculated using the reducing balance method with an acceleration factor of 2.0.

Solution

Let's calculate the annual depreciation rate:

For the first year, depreciation charges will be:

c.u.

For the second year:

c.u.

The distribution of depreciation charges and residual values ​​by year is given in Table. 5.3.

Table 5.3. Calculation of depreciation using the reducing balance method

Year of useful use	Depreciable cost, c.u.	Depreciation rate, % (K=2.0)		Amount of depreciation charges, c.u.		Underdepreciated cost,
			monthly		monthly

Productive method of calculating depreciation

Depreciation on fixed assets and intangible assets in a productive manner begins from the date of their commissioning.

With the productive method of calculating depreciation, depreciation charges (A i) for the reporting month (i-th) are determined by multiplying the volume of products (work, services) produced (performed) for the i-th month (OP i) by the amount of depreciation per unit of resource (g) :

. (5.9)

The amount of depreciation per unit of resource is equal to the quotient of dividing the depreciable cost (S) by the resource of the object, that is, by the volume of output (work, services) predicted during the life of the object.
:

(5.10)

Calculation example

The depreciable cost of a universal milling machine is 4,000 thousand rubles, the service life (production of parts) is 500 thousand units. The production of parts for the reporting month amounted to 4,000 units. The method of calculating depreciation is productive.

It can be described as the process of transferring part of the cost of fixed assets to manufactured products.

Companies independently determine the optimal depreciation method for their activities. Depreciation of equipment must be reflected both in accounting and tax accounting. However, the methods used in these accounting systems will differ. In accounting, one of the most well-known methods of calculating depreciation is the reducing balance method.

The reducing balance method of depreciation is a method that is applicable in a situation where the operation of an object is carried out unevenly. At its core, depreciation using the reducing balance method is appropriate when the maximum load on the operating system occurs during the initial periods of its use.

In what cases is reducing balance depreciation beneficial to the company, and in what cases is it not?

Depreciation using the reducing balance method makes sense in cases where the main capabilities of an asset are realized in the first years after commissioning. Most often, this method is used in relation to digital and computer equipment, since its cost decreases quite quickly, despite the fact that consumer characteristics remain unchanged.

However, in some cases, this method is not justified. Thus, you should not use the method of reducing the depreciation balance for objects whose useful life does not exceed three years - the owner of the operating system will not see the benefits.

How to calculate depreciation using the reducing balance method?

Calculating depreciation using the reducing balance method involves using the residual value of the fixed asset. Its annual value will be calculated using the following formula:

• Depreciation = Residual value x Depreciation rate.

If the equipment is used intensively, an indicator such as the acceleration coefficient is added to the formula, and it takes the form:

• Depreciation = Residual value x Depreciation rate x Acceleration factor / 100%.

Let's look at what each of the indicators represents.

The residual value of an object is determined as the difference between the original cost of fixed assets and the depreciation already accrued on it. This type of valuation is provided to reflect the value of a fixed asset on line 1150 of the balance sheet.

The depreciation rate is an indicator that represents the annual percentage of reimbursement of the cost of a fixed asset. Thus, the depreciation rate shows what part of the cost of the asset will be written off through depreciation during the year.

The acceleration factor is used in cases where the object is used very intensively. The letter of the Ministry of Finance No. 07-05-06/220 dated 08.22.06 states that it is allowed to apply the acceleration factor only when calculating depreciation using the reduced balance method. The company has the right to independently decide whether or not to use this coefficient in calculating depreciation.

The value of this relative indicator is determined by the company, but within the limits specified by law. At the same time, the organization can justify the choice made with technical documentation, permission from authorized bodies, as well as a time sheet and employee output schedule. At the same time, it is personnel documents, such as a time sheet or output schedule, that will be able to confirm the intensity of use of the fixed assets object.

Example of calculating depreciation using the reducing balance method

In order to clearly see how depreciation of a declining balance is calculated in accounting, we will give a specific example.

The printing company Elegia LLC purchased a digital cutting machine. Acquisition costs amounted to 540 thousand rubles. Useful life is 7 years. The company's internal documents establish the method of repaying the cost of fixed assets using the reducing balance method. Due to the fact that this machine will bring maximum income in the first years of its operation, Elegia LLC decides to use the acceleration indicator in the calculation, the value of which is 1.7%.

1. Let's determine the annual depreciation rate

NA = 100% / 7 years = 14.29%.

1. Taking into account the acceleration rate, the annual percentage depreciation rate will be equal to:

HA = 14.29% x 1.7% = 24.29%.

1. Calculation of the amount of wear and tear for the 1st year of equipment operation:

A = 540,000 rub. x 24.29% = 131,166 rubles, that is, monthly the company will depreciate property in the amount of 10,930.50 rubles. (131,166 / 12 months).

1. Calculation of depreciation for the 2nd year of operation of the facility:

A = (540,000 – 131,166) x 24.29% = 408,834 x 24.29% = 99,305.78 rubles, respectively, the company will write off 8,275.48 rubles monthly.

1. Calculation of depreciation amount for the 3rd year of equipment use:

A = (408,834 – 99,305.78) x 24.29% = 309,528.22 x 24.29% = 75,184.40 rubles. At the same time, the company will write off 6265.37 rubles monthly for depreciation of the machine.

In subsequent periods, the amount of depreciation will be calculated in a similar way.

Thus, determining the amount of wear and tear using the reducing balance method allows the OS owner to take into account the intensity of use of the equipment.

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