When should depreciation be discontinued?


Fixed assets used during the period of suspension of activity

During the suspension period, the entrepreneur has no right to conduct business, and thus to obtain revenues from this. So there is also the question of when should you stop using fixed capital formation?

As a rule, the entrepreneur must also discontinue depreciation write-offs of fixed assets that are not used from the month following the month of suspension. The exception is the situation when fixed assets are used to maintain or secure the source of income - then the entrepreneur has the right to make write-offs even during the period of suspension of activity.

Cessation of the use of fixed assets due to their transfer to another facility

In a situation where fixed assets are temporarily no longer used as a result of their transfer to another facility, their depreciation should not be interrupted. This is because the asset in question has not ceased to be used due to the cessation of activities. Additionally, there is no other case that would require the legislator to cease depreciation. Write-offs made during a break in use should be recognized as tax deductible costs.

Cessation of production

In the event of discontinuation of production in which depreciable assets were used, depreciation should be discontinued from the month following the month of discontinuation of production. Pursuant to tax law, only fixed assets used for business activity and related to the generated income are depreciated.

Sale of a fixed asset

Tax regulations clearly define the date of discontinuation of depreciation in the event of disposal of a fixed asset. In this situation, the taxpayer is obliged to make the last depreciation write-off in the month in which the fixed asset was sold (this date is determined, for example, by the date of concluding a transaction agreement).