Deduction of fixed assets and depreciation

Introduction

The purpose of this work is to make known in general terms the difference between the accounting and tax record of the deduction of a fixed asset, its corresponding depreciation, both accounting and tax.

In other words we will see in a general way to register the memorandum accounts in relation to the deduction of a fixed asset, the concept of both asset and depreciation according to the rules and laws.

Fixed asset and depreciation concept

Based on Bulletin C-6 Real estate, machinery and equipment, also known as fixed assets, are tangible assets that are intended to:

The use or of the same for the benefit of the entity the goods used for the production of articles for sale or for the use of the goods used for the provision of services to the entity

The purpose of acquiring these assets is to use them and not to sell them in the normal course of the entity's operations, and for this to be able to make deductibles, they need to be indispensable assets for the performance of the corresponding activity for the company.

Now in paragraph 39 Bulletin c-6 indicates that “Depreciation is an accounting procedure that aims to systematically and reasonably distribute the cost of tangible fixed assets, less their scrap value, if they have it, between the life estimated useful of the unit. ”

In very similar terms, articles 38 and 37 of the Income Tax Law (LISR) incorporate within the legal text the concepts of fixed assets and depreciation, respectively, except for the distribution of the cost of fixed assets, since that the only criterion accepted in the aforementioned Law is that of time.

Accounting record of the acquisition and depreciation of fixed assets

An example of the accounting record related to the acquisition of machinery is buying rigorous cash furniture and equipment for $ 100,000.00 plus VAT.

By acquisition of machinery

Machinery $ 100,000.00

Creditable VAT $ 16,000.00

Banks $ 116,000.00

For tax purposes, we will not need more records than those indicated above, since the original investment amount (MOI) for the purposes of the LISR is equal to the acquisition cost that, in its valuation rules, Bulletin C-6 indicates in its paragraphs 4 to 18.

For the depreciation of machinery

Depreciation expense $ 10,000.00

Accumulated depreciation $ 10,000.00

Here we will need one more record for the tax depreciation of fixed assets.

Now, according to the LISR in the deduction of investments - the only criterion accepted by said Law is that of time, in addition to recognizing the effects of inflation on the procedure to calculate the said deduction, different depreciation rates that we find in the Article 34 of the same law and the consideration of full months of use. For these reasons, the amount recorded as depreciation is not the one corresponding to the investment deduction and is not equal to the accounting record since this calculation using an update factor due to the inflationary effect.

The extra registration can be done through the "order accounts", as follows:

Accumulated depreciation $ 15,000.00 Accumulated tax depreciation $ 15,000.00

conclusion

After analyzing the corresponding norms and laws, both the accounting and tax accounting of an asset are the same, since for both the original investment amount is taken into account, quite the opposite with the recording of depreciation, since the accounting depreciation with tax they are different independently that for both the depreciation percentages are used according to the LISR law, the difference lies in that the fiscal depreciation is used an annual update factor due to the inflationary effect.