Many accountants are often faced with the problem of recording the costs of repairing equipment, buildings and other fixed assets. On the one hand, it is beneficial for an organization to reflect these expenses as repairs, since this will allow expenses to be written off in the current period in both accounting and tax accounting. On the other hand, there are certain risks and claims from the tax authorities: these expenses can be qualified as modernization and reconstruction of fixed assets, and subsequently additional taxes may be charged on them.

Modernization and reconstruction: features of reflection in the organization’s accounting

First, let's figure out what repair is and consider the basic concepts associated with the repair of fixed assets (OS).

Under repairs refers to a complex of construction works and organizational and technical measures to eliminate physical and moral wear and tear that are not related to changes in the main technical and economic indicators of the building.

According to clause 6 of PBU 6/01, the accounting unit of fixed assets is an inventory item.

Inventory object an object with all devices and accessories is recognized, or a separate structurally isolated object intended to perform certain independent functions, or a separate set of structurally articulated objects that constitute a single whole and are intended to perform a specific job.

If one object has several parts, the useful lives of which differ significantly, each such part is accounted for as an independent inventory item. According to the position of the Ministry of Finance of Russia (letter dated August 27, 2008 No. 03-03-06/1/479), this general rule also applies to tax accounting of fixed assets.

As a general rule, work on modernization include work caused by a change in the technological or service purpose of equipment, a building, structure or other object of depreciable fixed assets, increased loads and (or) other qualities (Article 257 of the Tax Code of the Russian Federation).

Thus, modernization is an improvement, improvement, updating of an OS object, bringing it into compliance with new requirements and standards, technical conditions, and quality indicators.

Now let’s take a closer look at what work is being carried out to reconstruct fixed assets.

According to the Tax Code of the Russian Federation reconstruction- this is the reconstruction of OS facilities, which is associated with improving production and increasing its technical and economic indicators. The reorganization is carried out according to the project for the reconstruction of fixed assets in order to improve the quality and change the range of products, as well as increase production capacity (clause 2 of Article 257 of the Tax Code of the Russian Federation). In other words, work aimed at reconstructing an object must change the technological or service purpose of the object, improve it, give it new functions (Resolution of the Federal Antimonopoly Service of the Moscow District dated February 3, 2009 No. KA-A40/96-09).

From this definition it follows that work aimed at reconstructing an OS object is considered only those works that change the technological or service purpose of this object, improve it, or give it new functions.

In accordance with the Tax Code of the Russian Federation, under technical re-equipment is understood as a set of measures to improve the technical and economic indicators of OS facilities or their individual parts based on the introduction of advanced equipment and technology, mechanization and automation of production, modernization and replacement of obsolete and physically worn-out equipment with new, more productive ones.

The main differences between these definitions are shown in the table.

Table. Distinctive features of modernization, reconstruction and technical re-equipment

Name of works	Sign
Completion, retrofitting, modernization	The work is caused by a change in the technological or service purpose of an object of depreciable fixed assets, increased loads and other new qualities
Reconstruction	The reconstruction of existing fixed assets is associated with improving production and increasing its technical and economic indicators; it is carried out under the project for the reconstruction of fixed assets in order to increase production capacity, improve quality and change the range of products
Technical re-equipment	A set of measures to improve the technical and economic indicators of fixed assets or their individual parts based on the introduction of advanced equipment and technology, mechanization and automation of production, modernization and replacement of obsolete and physically worn out equipment with new, more productive ones

The main distinguishing feature of the works indicated in the table is the increase in the technical and economic indicators of OS facilities.

In turn, the costs of repairing fixed assets represent the costs of systematically preserving objects from premature wear and tear and maintaining them in working condition.

Thus, we can conclude that the main difference between repair and modernization, reconstruction, technical re-equipment is that when performing repairs there is no change in the main technical and economic indicators of objects, and during modernization, reconstruction and technical re-equipment, these indicators are improving.

Example 1. The organization has a registered computer. The system unit has failed. By decision of management, a new system unit similar to the one that failed was purchased and installed. These costs are classified as capital repair costs, since the organization will disassemble the computer and replace the broken system unit with a new one.

Registration of repair work

To document the costs of repairing an OS facility, the responsible person must prepare the following set of documents:

1) an inspection report of the fixed asset or its components. To justify the costs of repairs, the specialist responsible for the technical condition of the operating system must draw up an inspection report of the fixed asset and record any identified deficiencies in it;

2) defective statement. Based on the inspection report of the OS, the technical specialist draws up a defective statement, where he indicates which elements need to be replaced in order to bring the object into working condition. Based on the defective statement, an estimate of repair costs is drawn up;

3) an order for repairs and a cost estimate approved by the head of the organization.

Registration of modernization works

The primary documents confirming the completion of work on the modernization of facilities are, in particular:

• schedule of planned work;
• cost estimates;
• contracts and work orders;
• acts of completed work;
• accounts;
• invoices and other documents.

The release of materials for repair, reconstruction and modernization is carried out on the basis of the following primary accounting documents:

• invoices;
• leave requirements;
• limit-fence cards, etc.

Registration of movement of fixed assets

To register and record the acceptance and transfer of fixed assets from repair, reconstruction, modernization, an act of acceptance and delivery of repaired, reconstructed, modernized fixed assets is used (form No. OS-3).

This act must be signed by an employee of the enterprise authorized to accept fixed assets, after which the act is transferred to the accounting department of the organization.

If the repair, reconstruction and modernization were carried out by a third-party organization, then the act is drawn up in two copies (one for each party) and signed by both parties. Subsequently, the act is certified by the chief accountant (accountant) and approved by the head of the organization or a person authorized to do so.

After approval of the act by the head of the organization or a person authorized by him, the act is transferred to the accounting department. In turn, the accounting employee enters reconstruction and modernization data into the inventory card for recording the asset (form No. OS-6).

The inventory card (form No. OS-6) contains Section 5 “Changes in the initial cost of fixed assets” and Section 6 “Repair costs”. Section 5 reflects the type of operation (reconstruction, completion, additional equipment, partial liquidation, modernization), as well as a document confirming the completion of the operation. The name of the document, number, date and amount of costs in rubles are also indicated.

Reflection in accounting for repair and modernization costs

The cost of fixed assets in which they are accepted for accounting is not subject to change, except in cases established by the legislation of the Russian Federation (clause 14 of PBU 6/01).

Thus, changes in the initial cost of fixed assets are permitted in cases of completion, additional equipment, reconstruction, partial liquidation and revaluation of objects.

Repair costs in accounting and tax accounting are written off at a time to the cost of production as expenses associated with production and sales.

Expenses for modernization of fixed assets increase the initial cost of assets.

Example 2. The organization repaired a failed fixed asset; the cost of the parts used for the repair was 1,500 rubles. During the same period, spare parts were installed on another fixed asset that were superior in technical parameters to the previous ones. The cost of new components was 2,500 rubles.

Expenses are reflected in accounting as follows:

D 10 “Materials” - K 71 “Settlements with accountable persons” - 1500 rubles. - reflects the cost of parts purchased for repair;

D 10 - K 71 - 2500 rub. - reflects the cost of parts purchased for equipment modernization;

D 26 “General business expenses” - K 10 - 1500 rub. - reflects the cost of parts used to repair the object;

D 08 “Investments in non-current assets” - K 10 - 2500 rub. - reflects the cost of parts used to modernize the facility;

D 01 “Fixed assets” - K 08 - 2500 rub. - the cost of the fixed asset is increased by the amount of modernization costs.

Increasing the useful life of a fixed asset

According to the provisions of clause 20 of PBU 6/01 and art. 258 of the Tax Code of the Russian Federation, during modernization, it is possible to increase the useful life of an OS object after the date of its commissioning, if after reconstruction, modernization or technical re-equipment of such an object, an increase in its useful life occurred.

In accordance with clause 20 of PBU 6/01, the useful life of a fixed asset is determined based on:

• from the expected life of this object in accordance with the expected productivity or capacity;
• expected physical wear and tear, depending on the operating mode (number of shifts), natural conditions and the influence of an aggressive environment, the repair system;
• regulatory and other restrictions on the use of this object (for example, the rental period).

Example 3. The organization's balance sheet includes a fixed asset (useful life - 37 months). The fixed asset belongs to the third depreciation group with a useful life of 3 to 5 years. The OS has been in operation for 3 years, the remaining useful life is 1 month.

By decision of the management, the equipment was modernized. The expert commission that accepted the equipment after modernization concluded that its useful life increased by another 1 year.

The remaining cost of the fixed assets, taking into account the increase in the amount of modernization costs, will be written off to the cost of production through depreciation deductions during the useful life of the object, namely within 1 year.

However, we should not forget that an increase in the useful life leads to an increase in the amount of property tax and an increase in the amount of income tax due to a decrease in the amount of depreciation charges.

It is also important to remember that an increase in useful life can be achieved only within deadlines established for the depreciation group in which such fixed assets were previously included.

Let us assume that in the situation described in example 3, the commission decides to set a new useful life of the fixed asset at 6 years. Due to the fact that the useful life for objects included in the third group is maximum 5 years, increasing it to 6 years for this object would be unlawful.

The useful life of the fixed asset does not change

After a completed upgrade, sometimes the useful life of the OS does not increase. In this case, the accrual of depreciation on the object continues based on the previous mechanism for calculating depreciation, until full repayment of the changed initial cost based on the remaining useful life of this object (letter of the Ministry of Finance of Russia dated November 3, 2011 No. 03-03-06/1/714) .

Calculation of the depreciation rate if the useful life of the object is not extended

Accounting. A change in the initial cost of a fixed asset, regardless of whether the useful life of this object is revised, leads to a change in the depreciation rate for this fixed asset.

Depreciation after reconstruction or modernization is calculated based on the residual value of the object and the remaining useful life (taking into account their increase) (clause 60 of the Methodological guidelines for accounting for fixed assets, approved by order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n).

Example 4. The organization has completed the modernization of a fixed asset.

The initial cost of the fixed asset was 210,000 rubles. Useful life - 3 years. At the time of completion of the modernization, the fixed asset had been in operation for 2 years. Modernization costs amounted to 50,000 rubles.

Thus, the residual value of the fixed asset, on the basis of which depreciation will be calculated for the remaining year of its useful life, will be 120,000 rubles. ; the monthly depreciation amount will be equal to 10,000 rubles.

Tax accounting. According to paragraph 2 of Art. 259 1 of the Tax Code of the Russian Federation, the amount of depreciation accrued per month on a fixed asset is determined based on:

• from its original (replacement) cost;
• depreciation rates calculated for this object taking into account its full useful life.

Residual value and remaining useful life apply it is forbidden.

Thus, when modernizing a fixed asset, there is a possibility of under-depreciation or premature write-off of the value of this object by the end of its useful life.

If the initial cost of a fixed asset has increased as a result of modernization, but the useful life has remained the same, then at the end of this period the object will not be fully depreciated.

Despite this, the organization, even after the end of the useful life of the asset, should accrue depreciation at the previous rate until the cost of the object is completely written off (letter of the Ministry of Finance of Russia dated June 9, 2012 No. 03-03-10/66, dated March 13, 2012 No. 03 -03-06/1/126, dated July 5, 2011 No. 03-03-06/1/402).

Example 5. In January, the organization put into operation a fixed asset at an initial cost of 600,000 rubles. Useful life (USL) - 60 months. In November of the same year, the OS was upgraded. The total cost of modernization is 200,000 rubles. As a result of modernization, the SPI has not changed.

Solution 1

Starting in February, the organization will begin to write off the initial cost of the operating system as expenses. From December, the organization will charge depreciation based on the increased original cost.

From February to November, the amount of monthly depreciation charges will be 10,000 rubles. (RUB 600,000: 60 months). Accordingly, at the beginning of December the residual value of the fixed assets is equal to 500,000 rubles. (600,000 rubles – 10,000 rubles × 10 months).

As a result of modernization, the initial cost of the OS will increase (clause 2 of Article 257 of the Tax Code of the Russian Federation) and will amount to 800,000 rubles. The amount of depreciation deductions taken into account starting from December will be 13,333 rubles. (RUB 800,000: 60 months).

By the end of the useful life, the organization will expense only RUB 766,667. (RUB 10,000 × 10 months + RUB 13,333 × 50 months). The remainder of the costs for the acquisition and modernization of fixed assets in the amount of RUB 33,333. (800,000 rubles – 766,667 rubles) the organization will take into account within three months after the end of the useful life of the fixed assets.

A different approach to calculating depreciation charges after modernization of a fixed asset, when the useful life does not change, is also possible.

In accordance with paragraph. 3 p. 1 art. 258 of the Tax Code of the Russian Federation, if the useful life of an asset has not increased as a result of its modernization, when calculating depreciation, the organization takes into account the remaining useful life.

Based on this rule, some arbitration courts conclude that the taxpayer has the right to charge depreciation based on the residual value of the fixed assets, increased by the amount of modernization costs, and the remaining useful life (Resolution of the Federal Antimonopoly Service of the Moscow District dated April 6, 2011 No. KA-A40/2125 -11, dated September 21, 2010 No. KA-A40/10411-10, dated June 3, 2009 No. KA-A40/4667-09, FAS Volga-Vyatka District dated May 7, 2008 No. A29-6646/2007 , dated April 29, 2008 No. A28-8591/2007-366/11, FAS Volga District dated July 17, 2007 No. A49-998/07).

Example 6. Let's use the data from example 5 and consider another option for calculating depreciation.

Solution 2

From February to November, depreciation will be expensed at the same rate as in solution 1, - 100,000 rub. [(RUB 600,000: 60 months) × 10 months]. Consequently, the residual value of the fixed assets in November will also be 500,000 rubles.

The amount of monthly depreciation deductions taken into account in expenses from December will be calculated based on the residual value of the fixed assets, increased by the amount of modernization costs (500,000 rubles + 200,000 rubles), and the remaining useful life - 50 months. It will be 14,000 rubles. (RUB 700,000: 50 months).

Thus, by the end of the useful life, the organization will completely write off the costs of acquiring and upgrading the OS:

10,000 rub. × 10 months + 14,000 rub. × 50 months = 800,000 rub.

Calculation of the depreciation rate if the useful life of the object is increased

Accounting. If, as a result of completion, additional equipment, reconstruction or modernization, there is an improvement (increase) in the initially adopted standard performance indicators of the asset, the organization revises the useful life of this object.

Example 7. Fixed asset item worth RUB 200,000. and a useful life of 2 years after 1 year of operation was modernized. The cost of modernization work amounted to 50,000 rubles. The useful life was revised upward by 1 year.

The residual value of the fixed asset taking into account modernization is 150,000 rubles. .

The new useful life will be 2 years.

The annual amount of depreciation charges will be equal to 75,000 rubles.

Tax accounting. How can an organization reflect modernization in tax accounting when its useful life increases? The financial department does not have a unanimous opinion on this matter.

The latest clarifications from the Russian Ministry of Finance indicate that in this case, fixed assets must be depreciated according to previous standards. The Tax Code of the Russian Federation does not provide for a change in the depreciation rate (see letters dated February 11, 2014 No. 03-03-06/1/5446, dated October 3, 2013 No. 03-03-06/1/40974).

However, in earlier letters, the financial department explained that when the useful life increases, it is necessary to depreciate the residual value of the fixed assets, taking into account the cost of modernization, according to the standards that are determined taking into account the extended useful life (letter of the Ministry of Finance of Russia dated September 26, 2012 No. 03-03- 06/1/503).

In accordance with paragraph. 2 p. 1 art. 258 of the Tax Code of the Russian Federation, an organization has the right to increase the useful life of an operating system after its modernization. Accordingly, the depreciation rate should be calculated taking into account the increased SPI (clause 2 of Article 259 1 of the Tax Code of the Russian Federation).

Example 8. In March, the organization acquired and put into operation a fixed asset with an initial cost of 300,000 rubles. The organization established its useful life at 25 months. In September of the same year, the OS was upgraded. The amount of modernization costs is 100,000 rubles. The SPI was increased to 30 months.

Solution

From April, the organization will begin to take into account the initial cost of the operating system in the amount of 300,000 rubles. The depreciation rate will be 4% (1: 25 months × 100%). The amount of monthly depreciation charges from April to September is 12,000 rubles. (RUB 300,000 × 4%).

Consequently, for this period the organization will take into account depreciation charges in the amount of 72,000 rubles. (RUB 12,000 × 6 months). At the beginning of October, the residual value of the fixed assets will be 228,000 rubles. (RUB 300,000 – RUB 72,000).

After modernization, the initial cost of the OS will be 400,000 rubles. (300,000 rub. + 100,000 rub.).

Based on this, the organization will expense the residual value of fixed assets for 21 months [(228,000 rubles + 100,000 rubles) : 16,000 rubles/month].

The fixed asset will be depreciated over 27 months (6 months + 21 months), i.e. before the expiration of its extended useful life.

Modernization of a fixed asset that is fully depreciated

Accounting. If the useful life is not revised, then at a time on the 1st day of the month following the month of completion of the modernization, the organization has the right to include the costs of its implementation in expenses as depreciation charges.

This approach allows the organization not to pay property tax on this fixed asset. Accordingly, there are risks of claims from inspection authorities.

Increasing the useful life is a right of the organization, not an obligation. However, in order to avoid claims from the tax authorities, it is recommended to slightly increase the useful life of the depreciated asset for accounting purposes after modernization.

Tax accounting. Since the fixed asset has been completely depreciated, its residual value is zero (Clause 5 of Article 270 of the Tax Code of the Russian Federation).

The initial cost of the object increases by the amount of modernization costs (clause 2 of Article 257 of the Tax Code of the Russian Federation).

In this case, the organization must apply the depreciation rate established when putting the OS into operation (letters of the Ministry of Finance of Russia dated April 5, 2012 No. 03-03-06/1/181, dated November 3, 2011 No. 03-03-06/1 /714, dated September 23, 2011 No. 03-03-06/2/146, dated December 27, 2010 No. 03-03-06/1/813, dated September 10, 2009 No. 03-03-06/ 2/167).

The new useful life of the modernized facility is not taken into account.

Example 9. The organization decided to upgrade the OS, the initial cost of which is 100,000 rubles. The useful life of the facility upon commissioning was set at 20 months.

By the time the modernization began, the OS was completely depreciated. Modernization costs amounted to 40,000 rubles. Upon completion of the modernization, the organization increased the useful life of this facility by 12 months.

Solution

The initial cost of the facility upon completion of modernization will be 140,000 rubles. (RUB 100,000 + RUB 40,000).

The amount of monthly depreciation deductions, taking into account the increased initial cost of the fixed assets (the depreciation rate does not change), will be 7,000 rubles each month. (RUB 140,000: 20 months).

The organization will write off the costs of upgrading the OS in accordance with clause 3 of Art. 272 of the Tax Code of the Russian Federation for 6 months (40,000 rubles: 7,000 rubles/month).

Depreciation bonus for modernization

In accordance with paragraph 9 of Art. 258 of the Tax Code of the Russian Federation, an organization is given the right to include in the expenses of the reporting (tax) period expenses for capital investments in the amount of no more than 10% of expenses incurred in cases of completion, additional equipment, reconstruction, modernization, technical re-equipment, partial liquidation of fixed assets.

According to Art. 258 of the Tax Code of the Russian Federation, depreciable property is distributed among depreciation groups in accordance with its useful life. The useful life is the period during which an item of fixed assets or an item of intangible assets serves to fulfill the goals of the taxpayer's activities.

Depreciation group of fixed assets	Property with a useful life
First group	From 1 year to 2 years inclusive
Second group	Over 2 years up to 3 years inclusive
Third group	Over 3 years up to 5 years inclusive
Fourth group	Over 5 years up to 7 years inclusive
Fifth group	Over 7 years up to 10 years inclusive
Sixth group	Over 10 years up to 15 years inclusive
Seventh group	Over 15 years up to 20 years inclusive
Eighth group	Over 20 years up to 25 years inclusive
Ninth group	Over 25 years up to 30 years inclusive
Tenth group	Over 30 years

For fixed assets belonging to the third to seventh depreciation groups, which include property with a useful life of more than 3 years and up to 20 years inclusive, similar expenses for capital investments are allowed to be included in the expenses of the reporting (tax) period in the amount of no more than 30%.

Expenses in the form of bonus depreciation are recognized as part of indirect expenses of the reporting (tax) period for which, in accordance with Chapter 25 of the Tax Code of the Russian Federation, the start date of depreciation (the date of change in the original cost) of fixed assets in respect of which capital investments were made falls (clause 3 Article 272 of the Tax Code of the Russian Federation).

The same OS can be upgraded more than once during its service life. Accordingly, the depreciation bonus taken into account for profit tax purposes in connection with the costs of modernizing the operating system can be taken into account each time an organization incurs costs for a new modernization of the same fixed asset (letter of the Ministry of Finance of Russia dated August 9, 2011 No. 03 -03-06/1/462).

The ending follows

Accounting Regulations “Accounting for Fixed Assets” PBU 6/01, approved by Order of the Ministry of Finance of Russia dated March 30, 2001 No. 26n.

The act of acceptance and delivery of repaired, reconstructed, modernized fixed assets (unified form No. OS-3) (OKUD 0306002) was approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7. From January 1, 2013, the forms of primary accounting documents contained in albums of unified forms of primary accounting documentation are not mandatory for use. At the same time, forms of documents used as primary accounting documents established by authorized bodies in accordance with and on the basis of other federal laws (for example, cash documents) continue to be mandatory for use (information of the Ministry of Finance of Russia No. PZ-10/2012).

The inventory card for recording a fixed asset object (unified form No. OS-6) (OKUD 0306005) was approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7.

Modernization of fixed assets is a process carried out to improve the efficiency of use of a fixed asset. The catch is that often the accountant confuses the terms a little. He doesn't see the difference between modernization and repair.

When using an item, it wears out mentally and physically. Modernization of an element serves as one of the methods for its restoration. This is a kind of work, after which the technological or service functions of the object change, and an option appears for its use for purposes that require increased returns.

It is noteworthy that the reflection of the results of modernization, reconstruction or completion in accounting and tax papers varies greatly. When a fixed asset comes into accounting, the accountant often tries to select for it in the documentation the same method of calculating depreciation and useful life. When the initial cost also turns out to be equal, then life becomes noticeably easier: the volumes of calculated depreciation will be the same.

But when carrying out modernization of main facilities, their reconstruction or general reassignment, it is necessary to accrue different amounts of depreciation in tax and accounting documents.

This is argued by the fact that the methods of monitoring depreciation volumes after performing the agreed work in accounting and tax accounting are noticeably different.

Concepts: modernization, reconstruction and repair of OS

What is modernization of fixed assets? Methods for displaying incurred costs in accounting are largely tied to their general essence, therefore it is important to accurately distribute the concepts, separating modernization from reconstruction or repair:

• Point 2 p. 257 of the Tax Code regulates that the modernization of OS facilities includes factors due to which changes are made to the technical or service function of a unit, as well as the overall capacity, productivity are increased, or new characteristics appear.
• Reconstruction of fixed assets - a complete change in structure. The process changes the results of its application, allows you to diversify the number of final products, increase their characteristics or quantity. The Tax Code also introduced the term “technical re-equipment”. It is associated with the work of new technologies and the depreciation of product manufacturing processes.

Attention! These 2 terms are connected by the fact that as a result, the OS item receives a number of improved characteristics, increases productivity, etc.

• Renovation is a completely different matter. During the process, no technical parameters are improved, but remain at the same level. The whole point is to eliminate existing breakdowns or replace worn-out spare parts.

In paragraph 14 of the act on the preparation of accounting “Accounting for fixed assets”, costs for the process of modernization, reconstruction or other re-equipment of a similar type increase the initial cost of the fixed asset.

It is noteworthy that, unlike expenses for modernization, expenses for the restoration of objects do not in any way affect the final value of the property; in tax documentation they are classified as other waste (according to paragraph 1. p. 260 of the Tax Code). In the financial statements, such movements of funds are included in the costs of maintaining a specific unit in which the specified fixed asset is used.

Modernization: paperwork

The decision to assign modernization must be formalized in the form of an order from the head of the enterprise. It must indicate:

• Reasons for the process;
• Working hours;
• Persons responsible for improvement.

When the modernization of equipment is transferred to the forces of third parties, it is necessary to conclude a contract with them. During the transfer of OS units, the contractor should draw up a transfer and acceptance document for a specific object for the purpose of modernization. The form is not important, a free version is allowed. If the OS donated for modernization is damaged by a third party, then this act will make it possible to claim compensation from the contractor for losses incurred for the loss of the object. In the absence of witness documentation, it will be difficult to prove the fact of direct transfer.

When sending an item for improvement to a separate division within the company (for example, to a construction team, etc.), it is necessary to draw up an invoice for the intra-organizational movement (for example, using a single form No. OS-2). When upgrading does not require changing the location of the OS, then there is no need to draw up any papers.

After completion of the modernization, an acceptance certificate for the OS with an improved configuration (for example, type No. OS-3) is filled out. It is compiled regardless of how the asset was modernized. However, in the case of an economic method, it is necessary to fill out the form in one copy, and in the case of a contract method, two copies (for both parties to the transaction). The document is signed by the following persons:

• Sitting on the acceptance committee assembled by the company;
• Responsible for the asset modernization process (representatives of the contracting company);
• Responsible for the condition of the OS item after the modernization.

Features of OS accounting

As mentioned above, modernization costs = increase in the price of fixed assets when preparing accounting papers. The company undertakes to maintain regulations on facilities according to the degree of their involvement:

• Stocks;
• In purpose;
• On modernization, etc.

Accounting for such assets according to the degree of their involvement can be carried out with or without being reflected in account 01 (03). It turns out that during long-term modernization it is reasonable to take OS items in a separate account “Fixed assets for modernization”. This kind of action can be shown by the entry: Debit 01 (03) subaccount Fixed assets for modernization CREDIT 01 (03) subaccount Fixed assets in operation.

• Sent for OS improvement.

After completing the upgrade of the item, reverse wiring is performed.

Accounting for OS upgrade costs

All expenses for the modernization of the operating system are reflected in account 08 “Investments in non-current assets”. To gain access to information on types of capital investments, it is reasonable to add the calculation “Modernization expenses” to account 08. The process of improving OS units is reflected in the documentation with a similar note: “DEBIT 08 subaccount “Modernization expenses” CREDIT 10 (16, 23, 60, 68, 69, 70, 76...)”

All expenses for the process must also be calculated. Important:

• Upon completion of the modernization, expenses recorded on account 08 can be included in the initial price of the OS asset or recorded separately on account 01 (03). Similar points are specified in paragraph 42 of the Methodological Instructions.
• If modernization expenses are included in the initial cost, then you need to make a posting: “DEBIT 01 (03) CREDIT 08 subaccount “Modernization expenses””
• After the modernization was completed, their starting price was increased. In this case, all expenses for the process are reflected in primary type papers for accounting for fixed assets. For reception, in the OS control inventory card.
• When separately accounting for modernization costs, all points are written off to account 01 (03). For example, for “Expenses for modernization of fixed assets.” An entry is made: “DEBIT 01 (03) subaccount “Expenses for modernization of fixed assets” CREDIT 08 subaccount “Expenditures for reconstruction”.

When expenses for the process are written off on account 01 (03), all expenses are sent to a separate inventory card.

Let's consider the issue of depreciation in relation to the following modernized fixed assets:
- having a residual value, i.e. whose useful life has not expired;
- having no residual value, i.e. whose useful life has expired;
- those that had no residual value or useful life at all due to a one-time write-off of the initial cost as expenses, which did not reach the cost indicator necessary to recognize the object as depreciating property (from 01/01/2016 - more than 100 thousand rubles).
In this article, modernization means any of those listed in paragraph 2 of Art. 257 of the Tax Code of the Russian Federation of operations, the consequence of which is an increase in the initial cost of fixed assets: completion; retrofitting; reconstruction; modernization; technical re-equipment.
Let us analyze the applicable provisions of Chapter 25 of the Tax Code of the Russian Federation, set out in Art. 257 - 259.1 Tax Code of the Russian Federation.

Calculation of depreciation of fixed assets using the straight-line method

According to paragraphs. 1 and 2 tbsp. 259.1 of the Tax Code of the Russian Federation, when a taxpayer establishes in the accounting policy for tax purposes a linear method of calculating depreciation (we are considering only this method), the procedure for calculating depreciation determined by this article of the Tax Code of the Russian Federation is applied. The amount of depreciation accrued for one month in relation to an object of depreciable property is calculated as the product of its original (replacement) cost and the depreciation rate established for this object. The depreciation rate for each item of depreciable property is determined by the formula:

where K is the depreciation rate as a percentage of the original (replacement) cost of the corresponding object;
n is the useful life of this object, expressed in months. (Previously, similar norms were contained in paragraphs 2 and 4 of Article 259 of the Tax Code of the Russian Federation, which is necessary to know in order to understand the explanations of official bodies in the corresponding period.)
The wording “defined by this article” allows us to assume that this procedure applies to all cases of calculating depreciation of fixed assets using the straight-line method, including after their modernization. Consequently, other norms of the Tax Code of the Russian Federation, which refer to the accrual of modernization, do not change the general procedure for calculating it.
This procedure provides that in the calculation of the monthly depreciation amount, such an indicator as the useful life is involved, but it does not mention what period it is, how it is determined, and this presupposes the possibility of using in the formula any of the useful lives determined according to the rules Chapter 25 of the Tax Code of the Russian Federation, if there may be more than one.
In addition, the norm in question does not define which of the possible initial values ​​is meant, which (despite the apparent unambiguity of this concept) can also take on different meanings. Here, replacement value is understood as the value formed as a result of the revaluation of fixed assets taken into account for the purposes of applying Chapter 25 of the Tax Code of the Russian Federation (paragraphs 4, 5, clause 1, Article 257 of the Tax Code of the Russian Federation). The same understanding of replacement cost is contained in clause 15 of the Accounting Regulations “Accounting for Fixed Assets” PBU 6/01, approved by Order of the Ministry of Finance of Russia dated March 30, 2001 N 26n, i.e. despite the fact that in paragraph 26 of this PBU, modernization and reconstruction are called methods for restoring a fixed asset object, they generate non-replacement cost.

Change in the initial cost of the OS

In accordance with paragraph 2 of Art. 257 of the Tax Code of the Russian Federation, modernization costs change the initial cost (clause 27 of PBU 6/01 says “increase”). Consequently, the value resulting from the capitalization of modernization costs is called the “changed (increased) original cost” (and not an independent “new” cost not related to the original one). This means that even a fully depreciated fixed asset retains such a characteristic as the original cost, and, accordingly, there may be a changed original cost.
Since in Art. 259.1 does not specify which initial cost - primary or modified - is used in the formula for calculating the monthly depreciation amount; it can be any of these two costs.

Establishing the useful life of the OSafter modernization

In paragraph 1 of Art. 258 of the Tax Code (in all editions) it is established that the useful life is determined by the taxpayer independently on the date of commissioning of the depreciable property in accordance with the provisions of this article of the Tax Code of the Russian Federation and taking into account the Classification of fixed assets approved by the Government of the Russian Federation. The taxpayer has the right to increase the useful life of a fixed asset after modernization within the time limits established for the depreciation group in which the specified fixed asset was previously included. If, as a result of modernization of a fixed asset item, its useful life has not increased, when calculating depreciation, the taxpayer takes into account the remaining useful life. In this case, you need to pay attention to the following:
- combines the one-time determination of the useful life and the possibility of increasing it subject to certain restrictions;
- this possibility does not depend on whether the initially established useful life has expired, which implies the permissibility of increasing and ending the useful life of a fully depreciated fixed asset;
- to calculate depreciation, the period remaining from the originally established useful life is used.
In combination with what is in Art. 259.1 of the Tax Code of the Russian Federation there is no definition of which of the three possible useful lives is used to calculate the monthly depreciation amount: initial; increased initial or remaining, the highlighted circumstances confirm that the indicator n used in the formula during the life cycle of fixed assets may not be a constant, but a variable value, and accordingly, the depreciation rate calculated on its basis may also change;
- it is not indicated from what value of the depreciated fixed asset - initial, increased original or any other (for example, residual, residual, increased by the cost of modernization, or only the amount of modernization) depreciation is calculated taking into account the increased or remaining useful life, but in This is not necessary, since this issue is resolved in Art. 259.1 of the Tax Code of the Russian Federation, taking into account clause 2 of Art. 257 of the Tax Code of the Russian Federation: this must be a changed (increased) initial cost.
Based on the above, we summarize that the procedure for calculating the monthly amount of depreciation in the form of the given formula, uniform for all situations, is established in Art. 259.1 Tax Code of the Russian Federation. In accordance with the generalized name of the indicators included in this formula, both of its multipliers, according to clause 2 of Art. 257 and paragraph 1 of Art. 258 of the Tax Code of the Russian Federation, can take on different values ​​throughout the life cycle of a fixed asset: the initial cost is transformed into a changed initial cost, the useful life can become either increased from the original or remaining until the end of the original, or in some cases even reduced from the original.

Note. After improving fixed assets, depreciation should always be calculated according to the single formula given in paragraph 2 of Art. 259.1 of the Tax Code of the Russian Federation, applied taking into account the norms of Art. 257 and 258 of the Tax Code of the Russian Federation on the possibility of changing both of its factors: the initial cost and the depreciation rate.

Thus, we can draw an important methodological conclusion that the absence in the Tax Code of the Russian Federation of a specific indication of the cost and/or period used to calculate depreciation in a given situation does not mean that in relation to it the taxation procedure as a whole or any from its mandatory elements listed in Art. 17 of the Tax Code of the Russian Federation is not established, and therefore, there is an irremovable ambiguity in the acts of legislation on taxes and fees (clause 7 of Article 3 of the Tax Code of the Russian Federation), which should be interpreted in favor of the taxpayer. Even if we assume that there is ambiguity, then it is clearly removable if we apply the general rule, which is the formula contained in paragraph 2 of Art. 259.1 of the Tax Code of the Russian Federation, - with the substitution of the corresponding values ​​into it.

Note. The absence of special regulation of a specific situation in the Tax Code of the Russian Federation indicates the need to apply the corresponding general norm to it, and not about the irremovable ambiguity of the Tax Code of the Russian Federation.

Let's consider general conclusions in relation to specific situations.

1. Upgraded OS with unchanged expiration datebeneficial use

In relation to a modernized fixed asset, the useful life of which has not been extended by the taxpayer, the increased initial cost and remaining useful life are applied.

Example. Upon commissioning, the fixed asset was assigned to the 6th depreciation group (property with a useful life of over 10 years up to 15 years inclusive). The initial cost at which the fixed asset was accepted for tax accounting is 1,000 units, the useful life established upon commissioning is 121 months, the “primary” depreciation rate is 0.83% (1 / 121 x 100% ), monthly depreciation amount is 8.3 units. (1,000 units x 0.83%: 100%).
After 4 years, when the residual value was 601.16 units. (1,000 units - 8.3 units x 48 months), modernization costing 350 units; no decision is made to change the useful life. Changed initial cost - 1,350 units. (1,000 units + 350 units). The residual value to be written off as expenses is 951.16 units. (601.16 units + 350 units). The remaining useful life of 73 months is used to calculate depreciation. (121 months - 48 months). The new depreciation rate is 1.37% (1/73 x 100%). The monthly depreciation amount is 18.5 units. (1,350 units x 1.37%: 100%). The residual value to be written off will be written off over 52 months. (951.16 units: 18.5 units), i.e. for a period less than the remaining useful life (73 months) and in general less than the originally established useful life ((48 months + 52 months)< 121 мес.).

In this case, the stimulating nature of the procedure established by the legislator for calculating depreciation of modernized fixed assets, aimed at encouraging taxpayers to update fixed assets in the form of any improvement, is obvious. The greater the amount of additional capital investments in fixed assets, the faster it will be written off. In this regard, it seems appropriate to make the following methodological thesis.
The economic basis, which, according to paragraph 3 of Art. 3 of the Tax Code of the Russian Federation must have a taxation procedure established by the Tax Code of the Russian Federation, which is manifested, in particular, in the fact that this procedure always has an economic orientation, which is expressed in stimulating or disincentivizing any model of economic “behavior” of business entities. Moreover, this also occurs in cases where we are not talking about establishing benefits, reduced rates or using other obvious and explicit methods and techniques. Therefore, identifying the economic meaning and orientation of the analyzed norm is one of the main (and established in the Tax Code of the Russian Federation) ways of adequately understanding the will of the legislator, “penetrating” its essence.
Separately, we should dwell on why, when determining the monthly amount of depreciation, it was not calculated by dividing the residual value subject to write-off (951.16 units) by the remaining useful life (73 months), which would result in a significantly smaller value attributable to expenses every month - 13.0 units. instead of 18.5 units. (as is often proposed and done). In paragraph 1 of Art. 258 of the Tax Code of the Russian Federation states that “when calculating depreciation, the remaining useful life is taken into account,” but the “procedure for calculating depreciation” itself, according to which the “amount of depreciation accrued for one month” is determined, is not established in Art. 258, and in Art. 259.1 Tax Code of the Russian Federation. Therefore, in Art. 258 of the Tax Code of the Russian Federation indicates what value should be placed in the indicator n given in Art. 259.1 of the Tax Code of the Russian Federation formulas in a given situation.
Moreover, when determining the monthly amount of depreciation by dividing the residual value to be written off by expenses by the remaining useful life, the stimulating nature of the established procedure is lost: the taxpayer who has modernized fixed assets will continue to depreciate them for the same amount of time as the one who did not spend on improvement, i.e. the first one will not receive any benefits.

Position of the authorities

The position of the Russian Ministry of Finance and the Federal Tax Service regarding the situation under consideration was clearly formulated (using numerical examples) in the mid-2000s and has not changed since then (Letters of the Federal Tax Service dated March 14, 2005 N 02-1-07/23, Ministry of Finance Russia dated 02/06/2007 N 03-03-06/4/10, dated 01/11/2016 N 03-03-06/40).
Reasonably based on the fact that the procedure for calculating the monthly amount of depreciation using the linear method is established only in Art. 259.1 of the Tax Code of the Russian Federation, the financial and tax authorities made a conclusion that does not follow from this that the indicator n denotes exclusively the useful life determined when the fixed asset was put into operation. At the same time, the norm of paragraph 1 of Art. 258 of the Tax Code of the Russian Federation does not indicate the remaining useful life; it is mentioned only in a situation where a fully depreciated fixed asset is being modernized (Letters of the Ministry of Finance of Russia dated September 10, 2009 N 03-03-06/2/167, dated November 18, 2013 N 03- 03-06/4/49459).
Consequently, the depreciation rate established upon commissioning of a fixed asset remains the same throughout its entire life cycle and is not recalculated in any situations, including after modernization (if in the formula K = 1 / n x 100% the value n does not change, then the indicator K also remains unchanged). As indicated in the cited Letters of the Federal Tax Service of Russia and the Ministry of Finance of Russia, when determining the depreciation rate, tax legislation does not provide for the use of indicators other than the initially established useful life.
As a result of applying a constant depreciation rate to the initial cost that has increased due to modernization, the actual period of complete write-off of the cost of the object through depreciation charges may turn out to be longer than originally established (in the Letter of the Federal Tax Service of Russia 2005 - this is 50 months instead of 48, in the Letter of the Ministry of Finance of Russia 2007 year - 43 months instead of 37). This possibility, as noted in two Letters, is due to the fact that, according to paragraph 2 of Art. 259 of the Tax Code of the Russian Federation, depreciation accrual for an object of depreciable property ceases from the 1st day of the month following the month when the cost of such an object was completely written off (i.e. not on the expiration date of its useful life) or when this object was removed from the composition of the depreciable property taxpayer for any reason.
The stated position (without numerical examples) on this issue is also reproduced in Letter of the Ministry of Finance of Russia dated January 11, 2016 N 03-03-06/40, which states that if after modernization of a fixed asset the taxpayer has not increased its useful life, depreciation should be calculated continue, using the depreciation rate that was determined when this fixed asset was put into operation, until the modified original cost is fully repaid.

Our conclusions

In connection with the given understanding of the official bodies of the content of the indicator n in the analyzed formula, we note the following:
- it is not based on the definition of this indicator in the text of the norm itself, since after the words “n is the useful life of this object of depreciable property, expressed in months” there is no indication “determined on the date of commissioning of this object” or “in the manner established by p. 1 Article 258 of the Tax Code of the Russian Federation", etc.;
- it turns out that the provision of paragraph 1 of Art. 258 of the Tax Code of the Russian Federation on the use of the remaining useful life when calculating depreciation is never applied, does not have any tax consequences, then why is it formulated in it;
- currently the Ministry of Finance of Russia recognizes that after modernization, an extended useful life can be used as the value of indicator n, but this contradicts the position that it is possible to use only the initially established useful life as such a value, and then it is not clear why the changed after modernization, the useful life can be applied (which is not stated in the Tax Code of the Russian Federation), but the remaining useful life directly named in the Tax Code of the Russian Federation cannot be used to calculate depreciation.

Arbitrage practice

Almost all judicial practice on the issue under consideration has developed in favor of taxpayers. Of the latest decisions, we present two generally typical judicial acts. The Resolution of the Volga Region Autonomous District of January 22, 2016 N F06-4506/2015 states that in paragraph 2 of Art. 257 and paragraph 1 of Art. 258 of the Tax Code of the Russian Federation establishes a procedure for determining depreciation taking into account the changed initial cost of the object and the remaining period of its use and, as a consequence, changes in the depreciation rate for modernized fixed assets. Since the useful life of fixed assets did not increase as a result of modernization, the taxpayer had the right to charge depreciation based on the residual value of fixed assets, increased by the amount of modernization costs, and the remaining useful life.
The Resolution of the AS of the West Siberian District dated 01.09.2016 N A45-18480/2015 noted that the tax authority’s calculation was made without taking into account the provisions of paragraph 1 of Art. 258 Tax Code of the Russian Federation. Application of the procedure for calculating depreciation proposed by the tax authority may lead to exceeding the maximum useful life for fixed assets of the corresponding depreciation groups.
In connection with the last argument (unfortunately, rarely used by the courts), we note that, although in paragraph 1 of Art. 258 of the Tax Code of the Russian Federation states that it is impossible for the taxpayer to make a decision to increase the useful life of fixed assets beyond the limit for the corresponding group; it is difficult to imagine that the purpose and meaning of this norm is only to prohibit drawing up a document on the useful life exceeding the limit, and not to indicate to the fundamental inadmissibility of such an excess.
In some cases, while not objecting to the use of the remaining useful life when calculating depreciation of an upgraded fixed asset, the tax authority challenges the cost to which the changed depreciation rate applies. Thus, in the dispute considered by the Volgo-Vyatka District Arbitration Court, the inspectorate believed that in order to establish the monthly depreciation amount, the non-increased initial cost should be multiplied by the depreciation rate, as follows from Art. 259.1 of the Tax Code of the Russian Federation, and the residual value of the fixed asset at the time of modernization, increased by the amount of modernization costs. It is clear that when the value of one of the multipliers decreased, the monthly depreciation amount turned out to be lower. The court did not support the tax authority (Resolution dated 04/08/2015 N A79-4383/2014).
Thus, disputes about the application of the formula given in paragraph 2 of Art. 259.1 of the Tax Code of the Russian Federation, after modernization, are carried out on two aspects: on the calculation of the depreciation rate and on the cost to which it applies.
First retreat. It is believed that if in controversial situations one follows the position of the tax authorities, then this is a conservative version of tax policy that allows one to avoid fines and penalties. Developers of accounting programs also proceed from this, using as the basic (standard) and sometimes even the only option the method of tax accounting that corresponds to the position of the tax authorities. In general, this is correct, unless you take into account the fact that the tax authority may change its position.

Example. Having not increased their useful life after the modernization of fixed assets, the taxpayer calculated depreciation based not on the remaining, but on the original useful life, i.e. acting in accordance with the recommendations of the Ministry of Finance of Russia and the Federal Tax Service of Russia and the position of tax authorities known from judicial practice. As a result, the organization inevitably, as shown earlier, was forced to continue to charge depreciation after the end of this initially established useful life.

By checking tax periods in which depreciation was accrued after the end of its useful life, the tax authority excluded depreciation amounts from expenses, while arguing that it should have been accrued based on the remaining, and not the originally established, useful life. In this case, depreciation would end before the audited periods, in which, for this reason, there should be no corresponding expenses (in the form of depreciation). Of course, the court agreed with the tax authority, because the judges always believed that in this situation it was necessary to apply the remaining useful life (Resolution of the Moscow District Court of December 29, 2014 N A40-60900/13).
Since the tax period in which the initially established useful life of the fixed asset ended expired three years earlier than the year in which the audit was carried out, it is very problematic to retain for tax accounting expenses in the form of depreciation that were not taken into account in that year. It is possible to submit an updated declaration, but it is pointless due to the norm of clause 7 of Art. 78 of the Tax Code of the Russian Federation, but try to take advantage of the provisions of paragraph 3, clause 1, art. 54 of the Tax Code of the Russian Federation is possible only through the court, bearing in mind the ambiguity of arbitration practice on the issue of the applicability of this norm to events more than 3 years ago.

Upgraded OS with extended useful life

In relation to a modernized fixed asset, the useful life of which has been extended by the taxpayer, the increased initial cost and the new (increased) useful life are applied.

Example. Upon commissioning, the fixed asset was assigned to the 6th depreciation group (property with a useful life of over 10 to 15 years inclusive). The initial cost at which the asset was accepted for tax accounting is 1,000 units, the useful life established upon commissioning is 121 months, the “primary” depreciation rate is 0.83% (1/121 x 100%) , monthly depreciation amount is 8.3 units. (1,000 units x 0.83%: 100%).
After 4 years, when the residual value was 601.16 units. (1,000 units - 8.3 units x 48 months), modernization costing 350 units. After completion of the modernization, the useful life was increased by two years (24 months). To calculate depreciation, a useful life of 145 months is used. (121 months + 24 months). The new depreciation rate is 0.69% (1/145 x 100%), the monthly depreciation amount is 9.32 units. (1,350 units x 0.69%: 100%). The residual value subject to write-off will be written off over 102 months. (951.16 units: 9.32 units), which, together with the useful life before modernization, will lead to a slightly longer useful life than the new extended one: 48 months. + 102 months = 150 months > 145 months

From an economic point of view, the obtained result can be assessed as the state’s disinterest in increasing the useful life of fixed assets, even modernized ones, since this can slow down the renewal of fixed assets. It is also possible to see in this the reason for the prohibition on increasing the useful life beyond the limit for the depreciation group. At the same time, it is the increase in the useful life of the upgraded OS that most accurately reflects the economic meaning of modernization as such, since in most cases it is aimed at extending the service life of the OS. Therefore, in accounting, where the facts of economic life are reflected based on the priority of economic content over the legal form, after modernization of the operating system, its useful life should always increase, including when this is prohibited in tax accounting.

Position of the authorities

The position of the Russian Ministry of Finance in relation to the situation under consideration for a long time was that, despite the taxpayer’s right to increase the useful life of fixed assets within the periods established for the corresponding depreciation group (clause 1 of Article 258 of the Tax Code of the Russian Federation), the depreciation rate determined on the date of commissioning The operating system in operation based on the initially determined useful life should not change (Letter dated July 10, 2015 N 03-03-06/39775, etc.).
Thus, once again it turned out that in the Tax Code of the Russian Federation there are provisions that do not have any tax consequences, and this was a methodological flaw in the position of the Ministry of Finance of Russia, due to the strong opinion that the depreciation rate is unchanged under any conditions.
In addition, this position led to tax risks, because it allowed a large amount of depreciation to be expensed monthly, as if it were calculated based on an extended useful life (with an increase in the denominator “n” of the fraction 1/n, the depreciable cost would be multiplied by a smaller amount) . Since the point of view of the Russian Ministry of Finance was not communicated to the Federal Tax Service of Russia and was not brought to the attention of the tax authorities, they could well disagree with it.
The Ministry of Finance of Russia changed its opinion and in Letter dated October 25, 2016 N 03-03-06/1/62131 indicated that if the useful life after reconstruction, modernization or technical re-equipment was increased, the organization has the right to charge depreciation at the new rate calculated based on the new useful life of the OS.

not increased by the taxpayer

In relation to a fully depreciated modernized fixed asset, the useful life of which has not been increased by the taxpayer, the increased initial cost and the same useful life are applied.

Arbitrage practice

Considering the problem of calculating depreciation after upgrading a fully depreciated OS, i.e. the useful life of which has expired, we first recall that to a controversial situation that is not regulated by the provisions of the Tax Code of the Russian Federation, it is necessary to apply a general legal norm, namely the formula contained in paragraph 2 of Art. 259.1 of the Tax Code of the Russian Federation, including the corresponding values.
In accordance with this statement, it is necessary to take the statements of courts found in arbitration practice that the Tax Code of the Russian Federation does not regulate the issue of attributing expenses to expenses in a situation where the useful life of the asset has expired, but the taxpayer nevertheless carried out its reconstruction (modernization) ) (Resolution of the Volga-Vyatka Autonomous District of 04/08/2015 N A79-4383/2014).
The situation when, after upgrading an operating system with an expired useful life, the taxpayer does not increase it, is quite rare, but possible. The main obstacle to increasing the useful life may be the establishment of a maximum useful life for the corresponding depreciation group during commissioning of an asset.
However, even in the absence of such an obstacle, the organization may have reasons not to extend the expired useful life of the upgraded OS. Knowing that if the useful life remains unchanged after modernization, the courts support the procedure for calculating depreciation based on the remaining useful life, the taxpayer sometimes hopes that the same courts will support the operation of lump sum write-off of the costs of upgrading an operating system, the remaining useful life of which is zero.
Nevertheless, these hopes are in vain: in Resolution No. A40-7640/09-115-26 dated March 28, 2013, the Moscow District Federal Antimonopoly Service indicated that capital costs cannot be written off at a time in accordance with clause 5 of Art. 270 of the Tax Code of the Russian Federation, since as a result of the reconstruction of the OS it remains so, the calculation of depreciation at its previous rate until full repayment of the changed initial cost does not contradict the provisions of Chapter 25 of the Tax Code of the Russian Federation and complies with the explanations of the Ministry of Finance of Russia.

Position of the authorities

Currently, the Russian Ministry of Finance also believes that when reconstructing an asset whose residual value is zero, the cost of the reconstruction will be depreciated according to the standards provided for this category of asset when this asset is put into operation (Letter dated 10/07/2016 N 03 -03-06/1/58661). And if the taxpayer did not increase the useful life (no matter for what reasons), this position seems justified, because there is simply no other useful life on the basis of which a different depreciation rate could be calculated.

Example. Let's keep the conditions of the previous example, but note that modernization is carried out no earlier than after 10 years, i.e. in relation to a fully stocked OS. Then the monthly depreciation amount will be 11.2 units. ((1,000 units + 350 units) x 0.83% : 100%), resulting in an upgrade cost of 350 units. will be written off as expenses for 31 months. (350 units: 11.2 units).

Fully customized modernized OS,useful life of whichincreased by the taxpayer

In relation to a fully depreciated modernized fixed asset, the useful life of which has been increased by the taxpayer, the increased initial cost and extended useful life are applied.
Initially, it should be noted that the described position is not beneficial to taxpayers, but it is based on the provisions of the Tax Code of the Russian Federation in accordance with their accepted understanding, and when analyzing legal norms, objectivity and consistency are paramount.
Firstly, because the originally established useful life has expired, it has not disappeared as a characteristic of the OS. Therefore, according to the terminology of the Tax Code of the Russian Federation (clause 1 of Article 258), one can only mean an increased, but not a new useful life, established without regard to the previous one, which has ended. This means that the useful life of a fully depreciated product should be increased only as a general rule, i.e. only within the time limits established for the corresponding depreciation group.
Secondly, to calculate the depreciation rate, it is not the indicator of the increase in useful life that is used, but the entire extended useful life.

Example. Let us keep the conditions of the first example, but indicate that modernization is carried out no earlier than after 10 years (in relation to a product whose useful life has expired). Thus, the cost of modernization is 350 units. with a depreciation rate of 0.69% and a monthly depreciation amount of 9.32 units. will be written off as expenses for 38 months. (350 units: 9.32 units).

This approach, in which the depreciation rate is reduced, does not suit taxpayers, and they try to justify the legality of calculating (increasing) the depreciation rate based on the newly established useful life, namely only from the amount by which the original period has been increased (Resolutions of the North Caucasus District Administration dated 08/09/2016 N A32-35378/2015, AS of the East Siberian District dated 06/17/2016 N A19-10686/2015, AS of the Moscow District dated 05/13/2015 N A40-127013/14, the transfer of which for review was refused by the Ruling of the RF Armed Forces dated September 11, 2015 N 305-KG15-10399).
Taking into account these judicial acts, the depreciation rate will increase from 0.69 to 4.17% (1: 24 x 100%), the monthly depreciation amount will increase from 9.32 to 56.3 units. (1,350 units x 4.17%: 100%), and the period for writing off the amount of modernization expenses will be reduced from 38 to 6 months.

Position of the authorities

In this case, the Ministry of Finance of Russia and the tax authorities take an intermediate position: based on the constancy of the initially determined depreciation rate, they, on the one hand, do not agree with its increase proposed by the taxpayer, but, on the other hand, do not demand its reduction, as is the case in our positions. According to their logic, the monthly depreciation amount, based on the initial depreciation rate of 0.83%, should be 11.2 units, which will allow the modernization costs to be written off in 31 months. (versus 38 months - with our approach and 6 months - with the taxpayer).
As we see, the position of the Russian Ministry of Finance and tax authorities is economically indifferent to whether the useful life of an asset after modernization is extended or not - in both cases, the cost of modernization is written off as expenses for the same period of time.
If we consider that the norms of the Tax Code of the Russian Federation should stimulate the modernization of any OS (both partially and fully depreciated), then the position of taxpayers supported by the courts is the most consistent with this goal, and our position is the least consistent. However, if we assume that, with the help of the legal norms of the Tax Code of the Russian Federation, the legislator wanted to make it more profitable for taxpayers to replace outdated equipment, rather than improve it in any form, i.e. to make the latter precisely unprofitable, then the opposite conclusion follows: our position will be the most consistent with this desire of the legislator, and the least consistent with that of the taxpayer.
In practice, the situation considered often arose in relation to fixed assets belonging to the so-called 11th depreciation group. Let us recall that as of January 1, 2002, this group included depreciable fixed assets, the actual life of which (actual depreciation period) as of that date was longer than the useful life that would have been established for them in accordance with the requirements of Art. 258 Tax Code of the Russian Federation; the minimum useful life for this group was 7 years (clause 1 of Article 322 of the Tax Code of the Russian Federation as amended, in force until 2009), but in fact most taxpayers also used it as a maximum, as a result of which it ended in relation to these fixed assets in 2008

Our conclusions

In our opinion, when establishing an additional useful life of such fixed assets after their modernization, one should focus on the periods determined for the depreciation group in which they fall on the date of completion of the modernization (relatively speaking, on the date of commissioning after modernization). However, the specificity of the situation is that in this new group the period may be less than the originally established useful life of 7 years (84 months). If a unified methodological approach is observed, this circumstance should not affect the assessment of the resulting result.
It is clear that in practice, participants in tax legal relations are often guided not by principles, but by interests. In a situation where the period in the corresponding depreciation group is less than 84 months, which is chosen by the taxpayer, the tax authorities require that the initially established useful life of 84 months be used when calculating the depreciation rate. If the lower limit of the period in the corresponding depreciation group is more than 84 months, then the taxpayer “remembers” the principle of the invariability of the depreciation rate defended by the official bodies and chooses a period of 84 months, but the tax authority, in turn, “forgets” about this principle, insisting on the application of the deadlines established for the depreciation group.

Arbitrage practice

In both cases, the courts support the taxpayers (according to the Resolution of the Volga District Court of 02/08/2016 N F06-5004/2015, the North Caucasus District Court of 05/05/2016 N A32-6071/2015, the transfer of which was refused for review by the Ruling of the RF Armed Forces dated 18.08 .2016 N 308-KG16-9688).
Let us recall that in such situations, when on a clearly methodological issue there is contrary arbitration practice and there are no clarifications from the Federal Tax Service of Russia, the tax authority must send the draft report of a desk or field audit for approval to a higher tax authority to develop a unified position (clauses 1, 5 clause 6, clause 14 of the Procedure for organizing the activities of tax authorities on the formation of a unified methodological position in the field of taxation of legal entities, approved by Order of the Federal Tax Service of Russia dated October 17, 2013 N ММВ-7-3/449@). In many cases, recourse to this Order, which ensures the predictability of the behavior of tax authorities, and therefore the prediction of tax risks, is an effective means for the taxpayer in a dispute with the tax authority.
Second retreat. As noted, disputes about the procedure for calculating depreciation are not only regarding the useful lives used to calculate the depreciation rate, but also regarding the cost of the modernized fixed assets to which this depreciation rate is applied. Thus, in the already cited example of a dispute (Resolution of the Moscow District Administration No. A40-60900/13), the tax authority also accused the company of unlawfully inflating the amount of modernization of operating systems, the useful life of which at the date of commissioning after modernization had expired. This happened, according to the inspectors, due to the fact that the monthly depreciation amount was calculated not on the basis of the cost of modernization, but on the sum of the initial cost and the cost of modernization. At the same time, there was no dispute on the issue of the invariability of the depreciation rate established when putting the operating system into operation.
If we are based on our cross-cutting example, then according to the logic of the taxpayer, which is fully consistent with the procedure for determining the first factor from the formula of clause 2 of Art. 259.1 of the Tax Code of the Russian Federation, to determine the monthly amount of depreciation, the depreciation rate of 0.83% should be applied to the value of 1,350 units, and according to the incomprehensible logic of the tax authority - only to modernization expenses in the amount of 350 units. In the first case, the amount of monthly depreciation will be 11.2 units. with the write-off of modernization costs for 31 months as expenses. (350 units: 11.2 units), and in the second - 2.9 units. (350 x 0.83% : 100%) and 121 months. (350 units: 2.9 units) respectively.
The court took the side of the tax authority, the methodological basis of which is the opinion that in the absence of special regulation of the situation under consideration in the Tax Code of the Russian Federation, it does not contain any norm at all to be applied in this case. This position allows one to consider oneself not bound by anything (including the general applicable norms of the Tax Code of the Russian Federation) when making decisions. At the same time, the argument of the tax authority and the court that the procedure used by the taxpayer for determining the initial cost after modernization, in fact, leads to a repeated write-off of previously taken into account costs (depreciation), seems incomprehensible and not supported by figures, since with any procedure for calculating the monthly depreciation amount for expenses cannot be written off in an amount exceeding the cost of modernization, and the period over which this occurs does not affect the total amount of recognized expenses.

Depreciation of the modernized OS at its original costno more than 100 thousand rubles written off at a time
for commissioning costs

Agreeing with the opinion of the Russian Ministry of Finance that the question of writing off modernization costs through depreciation arises if the amount of the written-off initial cost and modernization costs exceeds 100 thousand rubles. (Letter dated 02/07/2017 N 03-03-06/1/7342), we note the following. This opinion, more than the previous ones, corresponds to that contained in paragraph 2 of Art. 257 and paragraph 2 of Art. 259.1 of the Tax Code of the Russian Federation to the idea that, being written off as expenses (no matter through depreciation or a lump sum), the original cost as an integral characteristic of the OS does not disappear and therefore, after modernization, not an independent new, but a changed initial cost is formed. Consequently, the method of writing off the corresponding increase amount (through depreciation or a lump sum) should be determined according to the general procedure, depending on the amount (more or not more than 100 thousand rubles) of the changed initial cost.
Thus, two previous approaches of the Russian Ministry of Finance to the issue of the procedure for writing off the cost of modernization (always at a time or depending on the ratio of the amount of modernization expenses with the cost criterion for recognizing an object as depreciable property (Letters dated March 25, 2010 N 03-03-06/1/173 and dated April 14, 2005 N 03-01-20/2-56, respectively)) seem less consistent with the logic and norms of the Tax Code of the Russian Federation and their correlation.
At the same time, the Letters of 2017 and 2005, according to which it may become possible to non-lump sum write-off as expenses the amount of costs for upgrading the operating system, the initial cost of which is lower than the criterion for classifying them as depreciable property, does not talk about the procedure for determining the useful life, and without it it is impossible calculate the depreciation rate. Obviously, as the initial useful life, the period in the depreciation group to which the fixed asset would be assigned should be used (selected from the appropriate range) if its initial cost exceeded 100 thousand rubles. Further, the calculation should be carried out as shown in the last two examples, depending on when the modernization is carried out - before or after the expiration of the selected useful life, whether it remained the same or increased.

The materials were prepared by a group of consultants and methodologists of ACG "Intercom-Audit"

Accounting for modernization of fixed assets

Restoration of a fixed asset object is carried out through repair, modernization or reconstruction.

The costs of modernization and reconstruction of fixed assets increase the initial cost of the object. If, as a result of modernization and reconstruction, the performance indicators of the facility improve (power, quality of use, etc.), then the organization must increase the initial cost of the facility and, therefore, the costs of modernization and reconstruction will be written off through depreciation.

In cases of improvement (increase) of the initially adopted standard indicators of the functioning of a fixed asset object as a result of reconstruction or modernization, the organization revises the useful life of this object.

As our consulting practice shows, an accountant often has a lot of questions related to recording operations for the reconstruction and modernization of fixed assets. Indeed, according to the norms of accounting legislation, as a result of reconstruction and modernization, the initial cost of an item of fixed assets in which it was accepted for accounting changes, in addition, its useful life may be revised. Naturally, these consequences cause difficulties with the calculation of depreciation.

Change in the initial cost of a fixed asset as a result of modernization

In accordance with paragraph 14 of PBU 6/01, changes in the initial cost of fixed assets, in which they are accepted for accounting, are allowed in cases of completion, additional equipment, reconstruction, modernization, partial liquidation and revaluation of fixed assets.

According to the new edition of paragraph 27 of PBU 6/01, the costs of modernization and reconstruction of a fixed asset object after their completion increase the initial cost of such an object if, as a result of modernization and reconstruction, the initially adopted standard performance indicators improve (increase) (useful life, power, quality of use and the like) of an object of fixed assets.

In accounting, in accordance with the Chart of Accounts for accounting the financial and economic activities of organizations and the Instructions for its application, approved by Order of the Ministry of Finance of the Russian Federation dated October 31, 2000 No. 94n, expenses for the modernization and reconstruction of fixed assets are taken into account on the balance sheet account “Investments in”, subaccount 9 "Costs for modernization of fixed assets."

Example 1.

To develop a new type of product, the organization decided to modernize the machine, as a result of which the accuracy of processing parts will increase.

The organization entered into an agreement to carry out work with a contractor. According to the contract, the cost of work to modernize the machine was 23,600 rubles (including VAT - 3,600 rubles). Let’s assume that the initial cost of the machine was 300,000 rubles, the amount of accrued depreciation before upgrading the fixed asset was 50,000 rubles.

These transactions are reflected in the organization’s accounting as follows:

Account correspondence		Amount, rubles
Debit	Credit
			The cost of modernizing the machine is reflected
			VAT on modernization costs included
			Accepted for VAT deduction
			The initial cost of the machine has been increased by the amount of modernization costs
			Paid for the modernization of the machine

Thus, as a result of the measures taken to modernize the machine, its initial cost was 320,000 rubles, - 270,000 rubles.

Please note: in accordance with the norms of Chapter 21 of the Tax Code of the Russian Federation, an organization that pays VAT has the right to receive a deduction for the amount of tax presented for payment by the organization that modernized the fixed asset (subclause 1 of clause 2 of Article 171 of the Tax Code of the Russian Federation).

The organization that owns the modernized established asset will receive the specified deduction on the basis of an invoice after registration of the completed modernization work. This follows from paragraph 1 of Article 172 of the Tax Code of the Russian Federation.

End of the example.

Change in useful life of a fixed asset after modernization

As follows from the norms of PBU 6/01, the useful life of a fixed asset is determined by the organization independently when accepting the object for accounting. In this case, the organization proceeds from:

“the expected life of the facility in accordance with its expected productivity or capacity;

expected physical wear and tear, depending on the operating mode (number of shifts), natural conditions and the influence of an aggressive environment, the repair system;

regulatory and other restrictions on the use of this facility (for example, lease term).”

The last paragraph of paragraph 20 of PBU 6/01 establishes:

“In cases of improvement (increase) in the initially adopted standard indicators of the functioning of a fixed asset object as a result of reconstruction or modernization, the organization revises the useful life of this object.”

A literal reading of this rule allows us to conclude that the possibility of revising the useful life of a modernized fixed asset is a right of the organization, and not its obligation. Let us note that a similar point of view was expressed in the Letter of the Ministry of Finance of the Russian Federation dated August 4, 2003 No. 04-02-05/3/65 “On accounting for the reconstruction of fixed assets, the residual value of which is zero.”

A similar rule on the possibility of revising the useful life is provided for in paragraph 60 of Guidelines No. 91n:

“In cases of improvement (increase) in the initially adopted standard indicators of the functioning of a fixed asset object as a result of completion, additional equipment, reconstruction or modernization, the organization revises the useful life of this object.”

Thus, when modernizing a fixed asset item, the organization independently decides whether the useful life of the fixed asset is revised or not.

Calculation of depreciation after modernization of fixed assets

A change in the initial cost of a fixed asset, even in the conditions of a previously established useful life, naturally leads to a change in the depreciation rate for this fixed asset. Note that PBU 6/01 does not contain special provisions on how depreciation should be calculated after reconstruction or modernization. But paragraph 60 of Methodological Instructions No. 91n contains an example of calculating depreciation charges, which allows us to conclude that depreciation after reconstruction or modernization should be calculated based on the residual value of the object and the remaining useful life (taking into account its increase):

“An object of fixed assets worth 120 thousand rubles. and with a useful life of 5 years, after 3 years of operation it underwent additional equipment costing 40 thousand rubles. The useful life is revised upward by 2 years. The annual amount of depreciation charges is 22 thousand rubles. determined based on the residual value in the amount of 88 thousand rubles. = 120000 – ( 120 000× 3 / 5) + 40,000 and a new useful life of 4 years.”

Now consider the case when an organization decides to leave the same useful life. In this case, the annual amount of depreciation is determined based on the increased cost of the fixed asset and the remaining useful life. If we proceed from the conditions of the example given in Methodological Instructions No. 91n, then the amount of depreciation charges (linear method) will be calculated as follows.

Example 2.

A fixed asset costing 120,000 rubles and having a useful life of five years after three years of operation was retrofitted at a cost of 40,000 rubles. The useful life has not been revised. The annual amount of depreciation in the amount of 44,000 rubles is determined based on the residual value in the amount of 88,000 rubles (120,000 rubles - (120,000 rubles / 5 years x 3 years) + 40,000 rubles) and the remaining useful life - 2 years.

End of the example.

An organization can modernize a fully depreciated fixed asset, the residual value of which is zero. Since the norms of accounting legislation do not contain special rules for calculating depreciation in relation to such property, the accountant must apply general rules: the amount of depreciation is calculated from the residual value and the remaining useful life. In conditions of a fully depreciated fixed asset, the residual value is zero and, in fact, the useful life has already expired. But, since as a result of modernization the initial cost is subject to increase, therefore, the residual value of the object will also increase. According to paragraph 20 of PBU 6/01, the organization has the right to increase the useful life, therefore in this case it must revise the useful life of the fixed asset. As a result of this approach, all the initial data for calculating depreciation, residual value and useful life are available. In fact, in this case, during the new established useful life of the facility, the organization will repay the costs of modernization.

Example 3.

A fixed asset costing 120,000 rubles and having a useful life of five years after five years of operation was retrofitted at a cost of 40,000 rubles. The new useful life is two years. The annual amount of depreciation in the amount of 20,000 rubles is determined based on the cost of additional equipment in the amount of 40,000 rubles (120,000 rubles - (120,000 rubles / 5 years x 5 years) + 40,000 rubles) and a useful life of 2 years.

End of the example.

Example 4. From the consulting practice of JSC “ BKR -INTERCOM-AUDIT.”

Question:

The organization modernized the fixed asset. The useful life has not been extended.

Does the organization have the right to write off the amount of modernization of a fixed asset over the remaining useful life of the fixed asset or is it necessary to calculate depreciation based on the rate established when putting the fixed asset into operation (that is, the increased cost of the fixed asset will be written off longer than its useful life)?

Depreciation is calculated using the straight-line method in both tax and accounting accounting.

Answer:

Let's consider the rules for calculating depreciation for modernized fixed assets in accounting. It is necessary to determine the impact of modernization costs on depreciation after completion of the work without changing the useful life.

According to paragraph 27 of PBU 6/01, the costs of modernizing a fixed asset after completion of work increase its initial cost.

Modernization costs are reflected in the account. To account for such costs, an organization can, in the working chart of accounts approved by the order on accounting policies, provide for account 08 “Investments in non-current assets” a separate sub-account “Modernization of fixed assets”.

Upon completion of the modernization, the costs are written off to the debit of account 01 “Fixed Assets”, increasing the cost of the fixed asset in analytical accounting (clause 42 of the Guidelines for accounting for fixed assets; Instructions for using the Chart of Accounts).

In accordance with paragraph 60 of the Methodological Guidelines for Accounting for Fixed Assets, when improving the performance indicators of a fixed asset object as a result of the modernization of the organization, it is recommended to establish a new useful life. The same procedure is determined by paragraph 20 of PBU 6/01.

The Letter of the Ministry of Finance of the Russian Federation dated June 23, 2004 No. 07-02-14/144 “On Accounting of Fixed Assets” explains that when the initial cost of an item of fixed assets increases as a result of modernization, the annual amount of depreciation charges is recalculated based on the residual value of the item, increased on modernization costs, and remaining useful life.

Please note that this procedure applies only to the linear method of writing off depreciation charges.

In the situation under consideration, the useful life does not increase.

For accounting purposes, after modernization and an increase in the value of a fixed asset, the rate of monthly depreciation charges increases. The cost of an item of property, plant and equipment is written off in full over its original useful life.

End of the example.

Example 5.

The organization modernized the fixed asset. The initial cost of the object is 400,000 rubles. The useful life is 72 months (the fixed asset belongs to the fourth depreciation group - from 5 to 7 years). Depreciation is calculated using the straight-line method.

At the time of modernization, the fixed asset was depreciated over 20 months. The amount of accrued depreciation is 111,111 rubles. Modernization costs amounted to 50,000 rubles.

After modernization, the cost is 450,000 rubles. Remaining service life is 52 months.

Thus, the monthly depreciation amount, starting from the 1st day of the month following the month of completion of the modernization, will be 6,517.10 rubles ((450,000 rubles - 111,111 rubles) / 52 months).

In this case, the new depreciation amount should be applied from the 1st day of the month following the month of completion of the modernization work.

Depreciation continues until the cost of the fixed asset is fully repaid or it is written off from the balance sheet (clause 21 of PBU 6/01).

End of the example.

Example 6. From the consulting practice of JSC " BKR -INTERCOM-AUDIT.”

Question:

In what order shouldkeep accounting records and write off materials when modernizing fixed assets? Is an order issued for modernization?

Answer:

The regulatory documents do not stipulate the procedure for making and formalizing decisions on carrying out modernization work. As a general rule, such a decision is formalized by order of the head of the organization. In addition, paragraph 3 of Article 256 of the Tax Code of the Russian Federation provides for the transfer of fixed assets for modernization for a long period (more than 12 months) precisely by decision of the manager. This document must also be prepared for tax accounting purposes in order to justify the economic feasibility of these expenses in accordance with Article 252 of the Tax Code of the Russian Federation.

Accounting for costs associated with the modernization of fixed assets (including costs for modernization carried out during repairs carried out at intervals of more than 12 months) is carried out in the manner established for accounting for capital investments.

The costs of modernizing a fixed asset are recorded in the account for investments in non-current assets.

Upon completion of the modernization of a fixed asset item, the costs recorded in the account for investments in non-current assets increase its initial cost and are written off as a debit to the fixed asset account, and in this case a separate inventory card is opened for the amount of costs incurred.

In cases of improvement (increase) in the initially adopted standard indicators of the functioning of a fixed asset object as a result of modernization, the organization revises the useful life of this object (clause 60 of the Guidelines for accounting for fixed assets).

Materials received during the modernization of a fixed asset (removed from the fixed asset site) are subject to inclusion in other income. In accordance with paragraph 7 of PBU 9/99, assets received free of charge are other income. Clause 10.3 of PBU 9/99 establishes that the market value of such assets is determined by the organization on the basis of the prices in force for this or a similar type of asset at the time of their acceptance for accounting. This provision of PBU 9/99 also corresponds with paragraph 67 of the Guidelines for accounting of material and industrial inventories approved by Order of the Ministry of Finance of the Russian Federation dated December 28, 2001 No. 119n:

“the actual cost of materials received by an organization under a gift agreement or free of charge, as well as those remaining from the disposal of fixed assets and other property, is determined based on their current market value as of the date of acceptance for accounting.”

In this case, the residual value of the fixed asset is not reduced by the cost of the dismantled parts.

The delivery of materials received from the dismantling of fixed assets by departments to the warehouse is documented with invoices for the internal movement of materials (clause 57 of the Guidelines for accounting of inventories, approved by Order of the Ministry of Finance of the Russian Federation dated December 28, 2001 No. 119n).

Acceptance of completed work on the modernization of a fixed asset facility is formalized by a corresponding act. The unified form of the act of acceptance and delivery of repaired, reconstructed, modernized fixed assets (No. OS-3) was approved by Resolution of the State Statistics Committee of the Russian Federation of January 21, 2003 No. 7).

An increase in the initial cost of an item of fixed assets requires adjusting the data in the inventory card of this item. If it is difficult to reflect adjustments in the specified inventory card, a new inventory card is opened (preserving the previously assigned inventory number), which reflects new indicators characterizing the modernized object (clause 40 of the Methodological Instructions for Accounting for Fixed Assets).

End of the example.

For more detailed information on the specifics of accounting for expenses for the repair of fixed assets when applying special taxation regimes (USNO, UTII), the specifics of accounting for expenses for the repair of fixed assets received free of charge, you can read in the book of JSC "BKR-Intercom-Audit" "Repair and modernization of fixed assets."

Modernization of fixed assets - accounting and tax accountingIt is relevant for organizations that operate their own fixed assets. Modernization costs can be significant, which is why it is important to accurately reflect them in accounting.

Repair, reconstruction and modernization of the OS

During operation, organizations have to bear costs to ensure the functioning of fixed assets. The ways in which these costs are reflected in accounting depend on their essence, so it is important to define concepts such as modernization, reconstruction and repair:

• According to paragraph 2 of Art. 257 of the Tax Code of the Russian Federation, modernization includes work that results in a change in the technological or service purpose of a fixed asset, as well as an increase in its capacity, performance, or the appearance of new qualities.
• Reconstruction is a reorganization of the operating system, which improves the results of its work, allows you to increase the variety of products produced, improve their quality or quantity. Also, the Tax Code of the Russian Federation uses the concept of “technical re-equipment”, which is associated with the use of the latest technologies and automation of production.

NOTE! These two concepts are united by the fact that as a result the fixed asset acquires improved performance or new functions.

• During repairs, technical and economic indicators do not improve, but remain the same. Its essence comes down to eliminating faults that have arisen or replacing worn parts.

Upon completion of the work, the costs are included in the cost of the fixed asset or are accounted for separately on account 01 “Fixed assets” in the subaccount “Modernization of fixed assets”.

OS modernization is reflected in postings as follows:

• Dt 08 Kt 10, 60, 69, 70, 76 - modernization costs are collected;
• Dt 01 Kt 08 - when modernizing a fixed asset, this posting indicates an increase in its original cost.

For organizations with a large number of assets, it is also important to pay attention to analytical accounting.

To break down existing investments in non-current assets by type, a separate sub-account “Modernization costs” is opened on account 08 for the OS being modernized. On account 01 it is convenient to create a separate sub-account, where only objects that are in the stage of modernization will be listed, for example, “Fixed assets for modernization”.

When transferring fixed assets for modernization, the posting for their internal movement will be as follows:

Dt 01 subaccount “Fixed assets for modernization” Kt 01 subaccount “Fixed assets in operation”.

Accounting for depreciation during modernization

According to clause 23 of PBU 6/01, if the restoration period of an object exceeds 12 months, depreciation is suspended. The Tax Code of the Russian Federation supports the same approach (clause 3 of Article 256 of the Tax Code of the Russian Federation).

Results

Important points when accounting for OS modernization are the separation of the concepts of “repair” and “modernization” and the organization of convenient analytical accounting. It is also necessary to take into account the differences in accounting and tax accounting for the modernization of fixed assets, which will require the accountant to take action to ensure the correct reflection of temporary differences.

Read more about all the nuances of fixed asset accounting here.