Issues related to depreciation of fixed assets in chemical enterprises
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In chemical manufacturing companies, ordinary equipment and machinery are depreciated on an annual basis. For example, if the depreciation period is 10 years, when these devices and machinery are sold again after 10 years, can the selling price be included in the company’s profits?
There are no specific requirements for this, I guess it depends on the company’s own rules
It's an assumption. To whom are the equipment and machinery sold again? Are you getting rid of equipment, machinery, or installations? Close the factory or lay off employees? After the full depreciation of equipment and machinery, the remaining residual value is recorded on the accounts, and accounting treatment is carried out only when the fixed assets are scrapped and disposed of.
So how is the residual value calculated, and how are the funds for the disposal of fixed assets determined?
After depreciation, the equipment still has a net residual value, which can be considered as the price at which the equipment could be sold as scrap. If it is sold for a price higher than this amount, it can certainly be counted as a profit for the company. However, once the equipment is sold, what will be used to carry out production?
The residual value is recorded on the accounts; once all the equipment has been scrapped, it will be determined what value remains on the books and how much the total asset value has increased.
Yes, assuming you sell it, if the amount received from the sale is more than the residual value of the equipment, the difference is considered net profit and is subject to taxation. If it equals the residual value, then no action is needed. If it’s less than the residual value, it is recorded as a loss. You can ask your company’s accountant, and they will explain this to you in detail!
Fixed assets sold after depreciation should be classified as non-operating income, right?