YIDAO

The finance and tax questions manufacturers ask most

What are the risks of leaving construction in progress unconverted to fixed assets?

Three common risks: buildings and equipment already in use are under-depreciated, so profit is misstated; property tax on buildings may go unpaid; and without conversion and asset cards, the records needed for one-off deduction or accelerated depreciation are missing.

  • In accounting terms, an asset that is ready for its intended use but not yet through final settlement is transferred to fixed assets at estimated cost and depreciated (Application Guide to ASBE No. 4, Fixed Assets).
  • Property tax: self-built buildings are taxable from the month after completion; buildings built by a contractor from the month after acceptance ((86) Caishuidizi No. 8).
  • Equipment and tools newly purchased between 1 January 2024 and 31 December 2027 with a unit value of RMB 5 million or less can be expensed in full in the year of purchase (MOF and STA Announcement No. 37 of 2023), provided the contract, invoice and acceptance record match.

Related pagesM08 Manufacturing cost and equipment assets M01 Internal audit

This page is general information only and is not tax, legal or accounting advice on any particular matter. Policy references reflect the documents in force at the time of writing; how they apply depends on the company's facts and on the local tax authority.

← All 30 questions

Have a specific problem and want a professional view on it?

Tell us the facts and we will tell you what kind of problem it is, how it is normally handled, and how far it can realistically be pushed on the evidence you have.

Contact us Explore our services