Fixed Assets

Fixed assets are the durable company resources such as land, buildings, machines, vehicles, computers, etc. Fixed assets have a long life span, in contrast to consumables, raw materials, etc. You can register and depreciate fixed assets using various methods.

You must depreciate most fixed assets because they decrease in value. Assets such as land and art that do not decrease in value are not depreciated. Furthermore, you do not depreciate assets you do not own but which you do want to register (for example leased assets).

Description

You can depreciate assets in two ways:

  • Fiscal depreciation

    You depreciate in accordance with a method that is permitted fiscally and you journalise the depreciation in question.

  • Commercial depreciation

    You depreciate in accordance with an alternative method that provides you with a better view of the result from a cost accounting perspective.

You determine yourself whether to use both methods or one or the other.

Note:

You do not need to depreciate assets that are less than € 450. You can deduct these costs fully in the year of purchase. You can record such assets as fixed assets and do the depreciation directly against a cost account.

Book value asset sale

The sum of the investments (there may be several purchases) increased by the additional costs, reduced by the reinvestment reserve for the previous asset and any subsidies of type 1 received. The book value is the basis for calculating the depreciation periods.

Bottom value

Only allowed for fiscal depreciation. For certain assets (company buildings), there is a bottom value below which depreciation is not allowed. Depreciation stops when the bottom value is reached.  If the bottom value is lowered then further depreciation is allowed. Intervening periods (closed years) have a depreciation of zero.  Profit ensures that the book value asset sale does not fall below the specified bottom value.

Residual value

The value that an asset has after depreciation has ended. This value remains on the balance sheet.

Reinvestment reserve

If there is a profit when an asset is sold, you can move this profit to another (replacement) asset. This lowers the asset sale book value of the replacement asset. If a replacement asset is not yet present then the profit can be entered in a general reinvestment reserve account.

Preparation

Procedure

Also see