Fixed Assets and Depreciation
What this domain tests
Fixed-asset questions test acquisition cost, capitalization versus repair expense, depreciation, and disposal. Grade 3 focuses on 定額法 (straight-line), residual value, and partial-year depreciation using 月割.
Core rules
- 取得原価 includes the purchase price plus necessary incidental costs: freight, installation, registration, and legal fees. These are capitalized, not expensed.
- 建物, 備品, 車両運搬具 are depreciated. 土地 is not depreciated.
- Straight-line depreciation = (cost − residual value) ÷ useful life. For a mid-year purchase, prorate by months.
- The indirect method records 減価償却費 / 減価償却累計額. The asset stays at cost; accumulated depreciation is a contra-asset.
- 資本的支出 extends useful life or improves the asset and is capitalized. 収益的支出 restores function and is expensed.
- On disposal, remove cost and accumulated depreciation; the difference is 固定資産売却益 or 固定資産売却損.
Worked example
Equipment costs ¥1,200,000, residual value is zero, and useful life is five years. It is acquired on July 1, and the fiscal year ends March 31, so the current year has nine months. Annual depreciation: 1,200,000 ÷ 5 = ¥240,000. Current-year depreciation: 240,000 × 9/12 = ¥180,000. Entry: 減価償却費 180,000 / 減価償却累計額 180,000. If the equipment is later sold for ¥700,000 when accumulated depreciation is ¥420,000, book value is ¥780,000. The entry is 減価償却累計額 420,000, 現金 700,000, 固定資産売却損 80,000 / 備品 1,200,000.
Traps
- Depreciating land.
- Expensing freight or installation costs instead of capitalizing them.
- Using full-year depreciation for a mid-year acquisition.
- Crediting the asset directly when the indirect method is required.
- Recording a sale gain as sales revenue rather than 固定資産売却益.