Putting an asset into use

What it means

Putting an asset into use is the moment when an acquired fixed asset becomes usable and the company starts recording it as an asset in use. Under the rules it is the day the asset is brought into a condition fit for use, meaning it is complete, performs its technical functions and meets the requirements of specific regulations.

Until then, acquisition costs accumulate as assets under construction. Putting the asset into use closes its acquisition cost and moves it to the relevant asset account. From that moment depreciation begins under the depreciation plan.

For buildings, fitness for use usually means a final occupancy permit; for machines, successful tests and commissioning; for vehicles, registration. The date is documented with a handover record.

How it works in practice

For each new asset we prepare a record with the client showing the date, acquisition cost, depreciation group and responsible person. The record is an important document because it determines when depreciation begins in the accounts and for tax depreciation.

At year end we review assets under construction and check whether any are in fact already in use. Putting an asset into use late means losing depreciation for the period it was already used, and this cannot be corrected in the company’s favour after the event in an audit.

When the asset is put into use we set up the depreciation plan: the accounting depreciation period based on expected use and the tax depreciation group under the law. We track the difference between them as a temporary difference in the tax calculation.

What to watch out for

Putting into use an asset that is not yet fit for use, such as a building without an occupancy permit, just to start depreciating earlier is a mistake. The tax office will disallow depreciation before the asset was actually fit for use and assess additional tax with interest.

For assets acquired with a grant, the date of putting into use may also affect the grant conditions, such as the durability period. We therefore align the date with the terms of the grant agreement.