How To Deal With The Fiscal And Tax Treatment Of Fixed Assets During The Trial Period?

The fifth provision of the accounting standards for enterprises, the basic principles, stipulates that an enterprise should carry out accounting recognition, measurement and reporting on pactions or events that occur in itself.

The twelfth provision stipulates that an enterprise should conduct accounting recognition, measurement and reporting on the basis of actual pactions or events, truthfully reflect all accounting elements and other relevant information that meet the requirements of recognition and measurement, and ensure the true and reliable accounting information.

The content is complete.

A company (hereinafter referred to as the buyer company) and B company (hereinafter referred to as the seller company) signed a "equipment trial sale contract", trial purchase an energy saving equipment.

The contract stipulates: the seller promises the buyer to take the trial first, and after the energy saving standard is reached, the buyer will pay the payment in installments according to the proportion of energy saving, and the Seller shall receive the installments in installments and issue the VAT invoices in installments.

So, how does the buyer's company conduct accounting and tax treatment during the trial of the equipment? Can it be deducted before the enterprise income tax as a fixed asset account for depreciation?

Financial accounting and tax laws and regulations do not specify the way accounting and tax treatment should be done for the purchase of trial equipment, but we can find the answers from the accounting standards of enterprises and the relevant provisions of the enterprise income tax law and its implementation regulations.

The twentieth provision is that assets refer to the resources formed by enterprises' past pactions or events, which are owned or controlled by enterprises, and are expected to bring economic benefits to enterprises.

The previous pactions or items referred to in the preceding paragraph include purchase, production, construction or other pactions or matters.

Transactions or events that are expected to happen in the future do not form assets.

Owned or controlled by an enterprise means that the enterprise enjoys the ownership of a resource, or although it does not enjoy the ownership of a resource, it can be controlled by the enterprise.

It is expected that it will bring economic benefits to enterprises, which means directly or indirectly leading to cash and cash equivalent logistics into the potential of enterprises.

The twenty-first provision stipulates that the resources conforming to the definition of assets defined in the twentieth provision of this criterion shall be recognized as assets at the same time satisfying the following conditions: (1) the economic benefits related to the resources are likely to flow into the enterprises; (two) the cost or value of the resources can be measured reliably.

The twenty-second provision stipulates that items that conform to the definition of assets and conditions of asset recognition should be included in the balance sheet. Items that conform to the definition of assets but do not conform to the conditions for the recognition of assets should not be included in the balance sheet.

"Accounting standards for Enterprises No. fourth - fixed assets" third stipulates that fixed assets refer to tangible assets with the following characteristics: (1) to hold goods for production, to provide services, to rent or to operate and manage; and (two) to use for more than one fiscal year.

The fourth rule is that fixed assets meet the following requirements: (1) the economic benefits related to fixed assets may flow into enterprises; (two) the cost of fixed assets can be measured reliably.

The seventh provision stipulates that fixed assets should be initially measured according to cost.

The eighth provision stipulates that the cost of outsourced fixed assets, including the purchase price, the relevant taxes and charges, and the pportation charges, loading and unloading fees, installation fees and professional service fees that may be attributable to the fixed assets before the fixed assets reach the predetermined usage state.

The fourteenth rule is that enterprises should depreciate all fixed assets.

"Accounting standards for Enterprises No. fourteenth - income" fourth stipulates that the sale of commodity income at the same time satisfies the following conditions: first, enterprises have pferred the main risks and rewards to the purchasers; (two) enterprises have not retained the right to continue to be linked to ownership, nor have they effectively controlled the sold goods; (three) the amount of income can be reliably measured; (four) the relevant economic benefits may flow into enterprises; (five) the related or incurred costs can be reliably measured.

In contrast with the above accounting regulations, the equipment tried by the buyer company is not the actual purchase and sale paction during the trial period of the purchase and sale business, and the sale and purchase have not yet been established. The main risks and rewards of the ownership of the goods have not been pferred. The ownership still belongs to the seller, not to the buyer, and does not have the settlement conditions for the payment of the goods. The seller company does not confirm the sale of the commodity revenue, and the buyer company does not pay the goods, and of course, there is no reliable measurement cost, so it does not satisfy the conditions for the confirmation of the fixed assets, and can not be accounted as the fixed assets of the enterprise.

Since the equipment used by the buyer's company is not yet available for the confirmation of the fixed assets, it does not belong to the buyer's company.

Of course, no depreciation can be made.

Only after the equipment has passed the trial, the payment is made according to the agreement and the VAT invoice is obtained, can all the fixed assets of the enterprise be included and the depreciation should be calculated according to the regulations.

To this end, the accounting treatment of the buyer's company should be:

If the ownership of the equipment is not pferred, the buyer shall have only the right to use and no ownership in the probation period.

However, in order to strengthen the accounting supervision and ensure the safety of the trial equipment, the buyer can receive the trial equipment, and the accountant can set up the "fixed assets reference book" to record the trial situation of the equipment.

(two) trial qualification, purchase and sale, payment of goods, special invoices and confirmation of fixed assets.

Borrowing: fixed assets -- energy saving equipment

Tax payable - value added tax payable (input tax)

Loan: bank deposit

When calculating fixed assets depreciation

Borrowing: manufacturing cost

Loan: accumulated depreciation

The eleventh provision stipulates that when calculating taxable income, the depreciation of fixed assets calculated according to the regulations shall be deducted.

The fifty-sixth regulation of the implementation of the enterprise income tax law stipulates that all assets of the enterprise, including fixed assets, biological assets, intangible assets, long-term prepaid expenses, investment assets and inventories, are based on historical cost.

The historical cost referred to in the preceding paragraph refers to the actual expenditure of the enterprise when obtaining the asset.

The fifty-seventh provision stipulates that the fixed assets mentioned in the eleventh section of the enterprise income tax law refer to the non monetary assets held by enterprises in order to produce goods, provide services, rent or operate and manage, and use for more than 12 months, including houses, buildings, machinery, machinery, pport means, and other equipment, utensils and tools related to production and operation activities.

The fifty-eighth provision stipulates that the fixed assets shall be determined according to the following methods: (1) the fixed assets purchased shall be the tax basis based on the purchase price and the related taxes and fees, and other expenses directly attributable to the asset's intended use.

In contrast with the above tax regulations, the equipment tried by the buyer company has not yet acquired the ownership of the assets, and it is not owned by the enterprise, and has not actually taken up expenditure and has not yet formed the historical cost. Therefore, it is impossible to determine the tax base of fixed assets.

Therefore, the equipment used by the buyer company can not be deducted before the enterprise income tax is deducted.

Only when the equipment is tried out, the business relationship is established, the ownership of the equipment is acquired, and the price of the equipment is paid in real terms, the tax base of fixed assets can be determined before depreciation of the fixed assets can be calculated and deducted before the enterprise income tax.