When we talk about write-offs of fixed assets, especially in the case of assets that suffer depreciation over time, it is common to have doubts about whether or not to write them off.
Even if the asset is no longer useful, there is no legal authorization to write it off. This can only happen when the asset is definitively removed from the company assets. As long as the asset has not been physically written off, it must remain registered in the accounting department.
DOCUMENTS REQUIRED FOR THE WRITE-OFF OF FIXED ASSETS
The taxpayer must prove the economic act or fact on which the accounting entries are based, in accordance with commercial and tax laws. The process of writing off a fixed asset requires the involvement of proper and suitable documentation, in other words, even if there is no formality imposed by law regarding the disposal of the asset.
It is important to emphasize that every write-off must be recorded in a competent document, such as a police report, sales invoice, donation invoice, scrap, donation in payment, among others.
If, for some reason, the company does not prove that the asset has been physically removed, the book value of the write-off will be characterized as an operating loss that is not deductible in determining the Real Profit and the Social Contribution on Net Profit.
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LEARN ABOUT THE MOST COMMON FIXED ASSET WRITE-OFF MODELS:
- For sale;
- Obsolescence or scrapping;
- Physical non-existence;
- Claims;
- Donation;
- Payment in kind.
Let's talk a little about each of these models:
Selling
Disposal through sale is the most common model for writing off fixed assets, and this procedure must be carried out using all the documents capable of proving and calculating the actual result, whether it relates to the gain or loss on the operation.
Obsolescence or scrapping
In order to write off an obsolete or scrapped asset, it is essential that the company has a technical report that indicates the reasons and data justifying the write-off.
The accounting record of the write-off of obsolete or scrapped assets acts as a debit to an account arising from accumulated depreciation, as well as a credit to the asset's cost account, the counterparts of which should be posted to a separate account with the result for the period that will record the net value of the asset written off.
Physical absence
At the end of physical inventories of fixed assets, it is common for there to be a confrontation with accounting surpluses, i.e. those assets that exist in the accounts but have not yet undergone a physical inventory.
Therefore, the first step is to make sure that the asset in question does or does not exist, and then launch an investigation into the matter.
It is important to mention that there are a variety of probabilities for this scenario, such as misplaced assets or problems with demobilization procedures, for example, scrapped assets that have been the victim of improper disposal through a lack of communication to the person responsible for assets, and as a result, the write-off has not been carried out.
In addition, any lost assets worth more than R$ 1,200.00 can be written off with the approval of the board of directors.
However, you should be aware that in this case, you will be subject to challenge by the tax authorities, with the possibility of being penalized according to the provisions of the law, such as sales without an invoice, indirect benefits, simulation or concealment of the facts, among other factors.
It is recommended that the entrepreneur follows these three steps: Investigation Report, Asset Section Opinion and Board Approval.
Claims
As soon as there is an insurance policy for a specific asset, the amount equivalent to the compensation due to the loss of fixed assets should be treated as operating income.
This factor can be seen in the most common example of all, which is vehicles, since the damaged asset will be written off and recorded in the income statement.
On the other hand, the indemnity received by the insurer will be considered the selling price of the damaged asset, which should be debited to a current assets receivables account, in addition to being credited to another operating income account for the year.
Therefore, after making the accounting records, the capital gain or loss from the operation will be calculated, and if there is a capital gain, the amount will be taxed for Income Tax and Social Contribution on Net Profit.
Meanwhile, if the loss is determined, it will be deducted by companies opting for Real Profit.
On the other hand, if the company has acquired credits from the Tax on the Circulation of Goods and Services (ICMS), Social Integration Program (PIS) and Social Contribution on Net Profits (CSLL), it is important to be aware that the remaining balances of the respective credits will have to be included in the acquisition cost of the asset in order to calculate the capital gain or loss.
Donation for fixed asset write-offs
Donations are set out in Article 13 of Law No. 9,249 of 1995, as well as in Article 365 of the RIR/99, and are only deductible if they are charitable donations.
For example:
Fixed assets 25,000.00
Accumulated depreciation 20,000.00
Book Value 5,000.00
D - Deductible (or non-deductible) donation 5,000.00
D - Accumulated Depreciation 20,000.00
C- Fixed assets 25,000.00
Giving in payment
The payment in kind consists of the delivery of an object in place of money, as a form of payment, provided that the creditor agrees.
Furthermore, the accounting treatment will be the same as for a sale and purchase of fixed assets, and the capital gain or loss must be calculated as usual.
It is also necessary to correct the value of the asset from the date of acquisition to the date of sale, since the same happens with the value of the accumulated depreciation for the same period in order to determine the book residual value, which will be the cost of selling the asset.
We hope that our content has helped to clarify your doubts on the subject.
In any case, we are willingness to talk further.
