act, documents and write-off procedure

To write off a fixed asset, you need to:

• Determine the reason for writing off fixed assets.

• Prepare the relevant documents (certificate of established circumstances, decision on write-off).

• Register the write-off in the accounting and tax reporting.

Since 2022, companies must be guided by the new accounting standard FSBU 6/2020 when recording all transactions with fixed assets. This standard establishes possible reasons for writing off fixed assets. The reasons may vary:

1. Physical wear and tear. For example, equipment may become obsolete or break down to the point where it is no longer profitable to repair it. This is a classic case of write-off.
2. Moral obsolescence. Equipment or software may become obsolete. For example, an old computer can no longer cope with new tasks and is replaced.
3. Accident or damage. If a fixed asset is severely damaged, it is written off since restoration is impossible.
4. Sale or transfer. If the property is sold or transferred to another person, it is removed from the register.

Write-offs are important to free the company from unused assets.

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How a company decides to write off assets

This occurs when assets are no longer useful or profitable to use. This may be due to wear and tear, breakdown, obsolescence, or the need to upgrade equipment.

The procedure consists of several stages:

1. Condition assessment. Specialists inspect the property, identify defects and assess the possibility of its further use. For example, if the computer equipment no longer supports modern programs, it is advisable to write it off.
2. Creation of a commission. A fixed asset write-off committee is created in the company, which examines the condition of the asset and decides whether it should be left on the balance sheet or written off.
3. Preparation of documents. If a decision is made to write off, the commission draws up a report, including a sample of the write-off of a fixed asset, where it indicates the reasons and the current state of the property.
4. Deregistration. After signing the act, the property is removed from the accounting records, and the company stops incurring expenses for its maintenance. It is important to properly organize the accounting and write-off of fixed assets in order to avoid problems with tax authorities.

This process helps companies maintain asset relevance and reduce costs. The write-off of fixed assets in budgetary institutions occurs according to the same established rules.

To do this, you need to follow these steps:

• Determine the cause.

• Make a property write-off report, which indicates all the necessary information about the property (name, quantity, price at initial accounting, price at write-off, reason for write-off).

• Conduct postings for writing off assets. To do this, write off the cost of the assets from the Fixed Assets account and credit the same amount to the Expenses for Core Activities or Sales of Goods, Works, Services account.

• Update the balance sheet and enter the changes into the accounting reports.

• Keep all documents that confirm the fact of write-off of property for the period established by law.

It is important to remember that the write-off of assets must be carried out in accordance with the law and accounting rules. This procedure requires care and precision to avoid errors and problems during subsequent audits by tax authorities or auditors.

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Liquidation often involves dismantling and disassembling equipment to extract parts that can be sold as scrap or spare parts. This process requires some expense, but can ultimately generate revenue.

Technical services are required to draw up a primary document that confirms the fact of liquidation and reflects the presence of remaining material assets. The Fixed Assets Write-Off Act can be used as a sample.

This happens according to certain rules so that everything complies with the law and there are no questions from the tax authorities. To begin with:

1. The company determines the residual value of the property being written off. This is an amount that takes into account depreciation. For example, if the equipment has been in use for several years, its value will be reduced.
2. They draw up a property write-off act. It indicates the reasons for write-off, the condition of the asset and other important data.
3. After write-off, the property is removed from the company’s balance sheet. It is important that all changes are reflected in the documentation.
4. If the write-off results in losses, they can be taken into account when calculating income tax. For example, when property has been damaged and cannot be restored.

This helps to keep correct tax records and avoid mistakes.

To write off such property, you need to go through several stages:

1. Assess the condition of the object. Specialists inspect the object, record its wear and tear or damage. For example, if the building is recognized as unsafe and its repair is not practical, it can be written off.
2. Draw up a write-off report. It specifies the reasons for write-off, estimated value, title deeds and other data.
3. Remove from balance. After the act is drawn up, the real estate object is removed from the register. All changes are recorded in the accounting documents.
4. Reflect in tax reporting. The company must account for the losses or gains from the write-off in the tax return. For example, if the property was sold before the write-off, this must be reflected.

The company must follow all rules and procedures when writing off assets to avoid violations of the law and unnecessary expenses.

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