If an enterprise has redundant and unused fixed assets due to reasons such as changing production, it should be transferred based on the net book value of the fixed assets and market conditions to reduce idle and occupied funds.

First of all, surplus and shortfalls should be adjusted within the company for a fee to reduce waste and losses. If the transfer price is lower than 80% of the net book value, it should be reported to the Group Finance Department and approved by the general manager.

According to Article 6 of the "Administrative Measures for Pre-Income Tax Deduction of Property Losses of Enterprises" (State Administration of Taxation Order No. 13, 2005-08-09), "In the course of business management activities, enterprises may incur losses due to sales, transfers, or liquidations of assets. Property losses, normal wear and tear of various inventories, and property losses caused by normal scrapping and liquidation of fixed assets that have reached or exceeded their useful life should be declared and deducted in the current period when the relevant property losses actually occur. Article 4 "All property losses of an enterprise , the deduction shall be declared in the year when the loss occurs, and shall not be deducted in advance or delayed. If the enterprise fails to declare the property loss in time due to calculation errors or other objective reasons, it shall not be deducted after the deadline.

According to the provisions of these Measures, the deduction shall be made. If approved by the tax authorities, the declaration shall be made in a timely manner in accordance with the prescribed time and procedures." The property losses of the enterprise can be deducted before income tax. However, for property losses that should be subject to the approval of the tax authorities in accordance with the law, they must be reported to the tax authorities for approval according to regulations before they can be deducted before tax. Otherwise, they cannot be deducted before tax.

However, not all property losses incurred by an enterprise must be approved by the tax authorities before they can be deducted before tax. According to the express provisions of Article 7 of Document No. 13 of the State Administration of Taxation, there are clear enumerated provisions on the circumstances of property losses that must be approved by the tax authorities before they can be deducted before tax. Any losses do not require approval by the tax authorities. Disposal losses arising from external sales of fixed assets do not fall under the circumstances clearly listed in the aforementioned articles that should be approved. Therefore, the losses can be directly deducted before income tax without the need to declare and obtain approval from the tax authorities.