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In summary:The depreciation period of an asset represents its normal period of use. cash app data It is determined according to professional practices and the company's own usage (a difference of 20% is still accepted by the tax administration);
To define the depreciation period, several factors must be taken into account such as obsolescence and intensity of use;
A tax simplification measure is applied to SMEs, allowing them to avoid having to look for the actual useful lives of the goods;
Furthermore, two methods allow depreciation to be carried out over a shorter period: exceptional depreciation and accelerated depreciation;
Finally, the depreciation period varies depending on the type of depreciable asset .
The amortization period: what is it?
The depreciation period of an asset corresponds to its normal period of use, defined according to professional practices and the specific use made by the company.
Why use depreciation? In accounting, depreciation is used to account for the loss in value of a fixed asset since an asset does not retain the same value from year to year and the depreciation period varies from one asset to another. Thus, this leads to the determination of a depreciation rate.This decision is up to the company manager who generally takes several elements into account, namely:
Obsolescence of the good (technical, commercial, technological, etc.) ;
The intensity and conditions of use of the good (wear and tear);
The company's fixed assets disposal and/or renewal policy ;
…And more!
In this way, the more frequently an asset is used, the faster its value will decrease and its depreciation period will be shorter. On the other hand, if the asset is used little, its depreciation period will be spread over a longer period, with a slower loss of value from year to year.
Did you know?
When an asset is fully depreciated, we say that it no longer has any book value. Its net book value is zero , or equal to 0. However, this does not mean that the asset no longer has any value. Indeed, the asset can, for example, be resold and generate a capital gain.
The principle of the tax simplification measure
Do you operate as an SME (Small or Medium Enterprise)?
In this case, you benefit from a tax simplification in terms of depreciation. Indeed, while in principle a company must depreciate its fixed assets (machines, equipment, etc.) according to their actual useful life, SMEs (defined in Article L 123-16 of the French Commercial Code) have the possibility of using the useful lives allowed for taxation , without having to estimate how long each asset will be used before it loses value.
Therefore, this simplified rule allows the two types of depreciation to be grouped together in a single account without having to separate accounting depreciation and tax depreciation. This lack of separation makes the accounting management of SMEs simpler and avoids noticing exceptional depreciation .
