Transfer of commercial goods to a fixed asset

Website

When running a sole proprietorship, there are situations in which the entrepreneur changes the decision as to the use of purchased commercial goods. One of such cases is the transfer of a commercial good to a fixed asset. Such an event is not neutral in terms of accounting and causes certain tax consequences under the Personal Income Tax Act, therefore it should be properly recognized in the tax revenue and expense ledger.

Transfer of commercial goods to a fixed asset

Let us remind you that commercial goods are goods intended for resale in an unprocessed state. Taxpayers who keep the tax book of revenues and expenses (KPiR) record their value at the purchase price in column 10 "Purchase of commercial goods and materials" according to the purchase price. From the moment the goods are recorded, this expense is a tax-deductible cost for the company.

However, in order for a given asset to be considered a fixed asset and subject to depreciation, it must also meet the following conditions:

  • be owned or jointly owned by the taxpayer,

  • be acquired or manufactured on its own,

  • be complete and fit for use on the day it is accepted for use,

  • have an expected useful life of more than one year,

  • be used for the needs related to the conducted business activity.

Therefore, if an asset that has been previously classified as a commercial commodity, the taxpayer intends to use it for the purposes of its business, it may enter it into the register of fixed assets - if, of course, it meets the above conditions.

When making a decision to reclassify a commercial item as a fixed asset, in the month of reclassification, the taxpayer must make a correction entry in the KPiR (with the sign "-") in column 10. In this way, the tax deductible costs will be reduced by the purchase price of the goods, i.e. the same amount, which was recorded earlier in this column.

Transfer of commercial goods to a fixed asset and proper documentation

The basis for making entries in the KPiR regarding the transfer of commercial goods to a fixed asset is the protocol for transferring the goods for company purposes. This document should contain at least:

  • document number,

  • the issuer or both parties to the transaction,

  • the date of issuing the proof and the date of the transaction,

  • the subject of the transaction, its value and quantity.

Then, the reclassified commercial goods should be included in the fixed assets register based on the OT document no later than in the month of putting them into service. This document should contain, among others, information such as:

  • date of putting the fixed asset into use,

  • its initial value,

  • type of fixed asset,

  • depreciation method

  • annual depreciation rate.

Start a free 30-day trial period with no strings attached!

The initial value of a fixed asset purchased for a fee should be the purchase price of a commercial product. From the thus determined initial value, depreciation write-offs can be made according to general principles.The entrepreneur, when entering fixed assets into the register, determines the depreciation method - straight-line, degressive or one-off. As a rule, depreciation write-offs can be made starting from the first month following the month in which the fixed asset was entered into the fixed assets register, which results from Art. 22 h of paragraph 1. 1 point 1 of the PIT Act. The value of depreciation write-offs is recorded in the KPiR in column 13 "Other expenses".

It is also worth adding that if the entrepreneur is the so-called a small taxpayer (his gross sales revenues did not exceed the PLN equivalent of EUR 2,000,000 in the previous tax year) may depreciate most of the fixed assets commissioned for use on a one-off basis.

The regulations allow for one-off depreciation to be applied to fixed assets included in the group 3-8 KŚT, with the exception of passenger cars.