Fixed assets register - when should it be kept?
The register of fixed assets includes tangible assets related to the activity performed. An entrepreneur who keeps a tax book of revenues and expenses and uses fixed assets in business is obliged to keep it. Read the article and learn more.
Record of fixed assets - obligation to keep it
The obligation to keep a register of fixed assets is specified in the regulation of the Minister of Finance of December 23, 2019 on keeping a tax book of revenues and expenses. In accordance with the content of par. 5 of this Regulation, natural persons, inherited enterprises, civil partnerships of natural persons, general partnerships of natural persons and partnerships, carrying out economic activity, required to keep a book of revenues and expenses, are required to keep records of fixed assets and intangible assets - in accordance with art. 22n paragraph. 2-6 of the PIT Act.
This obligation applies to both business entities that settle their accounts on the basis of the tax revenue and expense ledger, as well as lump sums.
Records of fixed assets and its keeping is necessary to include depreciation in operating costs. According to Art. 22n paragraph. 6 of the PIT Act, in the absence of records of fixed assets and intangible assets, the depreciation write-offs do not constitute tax deductible costs. In the absence of records of fixed assets and intangible assets, the depreciation write-offs do not constitute tax deductible costs.
Definition of a fixed asset
In accordance with the provisions of the PIT Act, fixed assets are owned or jointly owned by the taxpayer, acquired or manufactured on their own, complete and fit for use on the date of acceptance for use:
- buildings and premises owned separately,
- machines, devices, means of transport and other items.
Moreover, the expected period of their use should be more than one year. They must also be used by the taxpayer for the purposes related to his economic activity or put into use on the basis of a rental or lease agreement or an agreement specified in art. 23a point 1 of the PIT Act.
Fixed assets register - elements
The register of fixed assets does not have a specific formula, which means that this role can be played even by a handwritten document, provided that it will contain at least the following information:
- ordinal number,
- date of purchase,
- date of acceptance for use,
- specification of the document confirming the acquisition,
- determination of a fixed asset or intangible and legal value,
- symbol of the Classification of Fixed Assets,
- initial value,
- depreciation rate,
- the amount of the depreciation write-off for a given tax year and cumulatively for the period of these write-offs, including when the asset was ever entered into the register (list), then removed from it and re-entered,
- updated initial value,
- the updated amount of depreciation,
- upgrade value that increases the starting value
- the date of liquidation and its reason or date of disposal.
The initial value of the fixed asset and the register of fixed assets
In order to enter the purchased asset into the register of fixed assets and to depreciate it, it is necessary to establish its initial value.
The initial value is nothing else than the purchase price increased by the costs of obtaining a given asset. It is about the costs of transport, loading and unloading, insurance on the way, assembly, installation and commissioning, notary fees, fiscal and other fees, interest and commissions, less the due tax on goods and services (non-deductible VAT increases the initial value of the fixed asset). In the case of import, the purchase price includes customs duty and excise duty on the import of assets.
If a fixed asset was manufactured internally, the initial value is the sum of all costs incurred during its production, i.e. employee remuneration, costs of purchasing components, costs of using external services and other costs that can be included in the value of the manufactured fixed assets. They do not include the value of the entrepreneur's own work, his spouse and teenage children, and general management expenses.
The entrepreneur may also acquire a fixed asset by inheritance, donation or other free method. Most often, in this case, it is not possible to determine the initial value of such a fixed asset. Therefore, the legislator offers the possibility of evaluating similar assets at market value by comparing them, and if this is not possible, the only thing left to do is to seek the help of an expert appraiser. The initial value of a fixed asset is the purchase price, production cost or market value.
Entry in the register of fixed assets
Entries relating to fixed assets and intangible assets shall be made in the records not later than in the month in which they were put into use.
It is worth noting that the purchase date does not have to be the same as the date of acceptance for use of the fixed asset. The date of acquisition is usually the date on the invoice, bill or contract that transfers the right to the fixed asset to the taxpayer. It may happen that the asset on the date of purchase was not fit for use because, for example, it was not functional and required repair, then these two dates will not be identical. In such a situation, it should be remembered that it is the date of acceptance for use that determines the date from which depreciation will begin.
The register of fixed assets contains entries made on the basis of documents which show the initial value of the registered assets.
Correction of data in the register of fixed assets
The provisions do not define the rules for correcting entries in the register of fixed assets and intangible assets, however, it can be concluded that it will be permissible to delete the current content and enter a new one (while maintaining the legibility of the incorrect entry) and sign the amendment and put the date of its implementation.
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In the case of an improvement of a fixed asset, its initial value is increased by the sum of costs incurred for its improvement, including the purchase of components or peripheral elements, the unit purchase price of which exceeds PLN 10,000. Fixed assets are considered improved (improved) when the sum of costs incurred for their improvement (extension, reconstruction or adaptation) in a given tax year exceeds PLN 10,000.It should also be remembered that these expenses must increase the value in use in relation to the value on the day of accepting the fixed assets for use. Changes in the value in the records are made from the month following the month in which the improvement was made.
Permanent detachment of a component from a fixed asset
In the event of permanent separation of a component or a peripheral part from a given fixed asset, the initial value of this asset is reduced by the difference between the purchase price of the separated component and the sum of depreciation charges attributable to it in the previous period. Depreciation, at the new initial value, is performed from the month following the separation. Permanent disconnection will occur whenever the disconnected part contributed to the structure of the fixed asset or served as an element necessary for the full use of the device.
Fixed assets of low value
In the case of acquiring a fixed asset of low value, i.e. not exceeding the statutory net PLN 10,000 (in the case of VAT payers) or gross (in the case of VAT-exempt taxpayers), tax regulations allow for direct recognition of them as costs. The taxpayer does not have to include them in the register of fixed assets.