Fixed assets

Meaning

Fixed assets (الأصول الثابتة), property, plant and equipment under IFRS, are things a business buys to use rather than to sell: machinery, vehicles, computers, furniture, fittings, buildings. They are recorded at cost, including delivery and installation, and that cost is spread over the years of use as depreciation; the balance sheet shows the net book value. Land is not depreciated.

A fixed-asset register lists each asset with its date, cost, useful life, method, accumulated depreciation and location, and is what ZATCA asks for when fixed assets are deducted from the zakat base. Capitalising a purchase or expensing it is a judgement: a policy threshold (say SAR 2,000) keeps small tools out of the register. Selling or scrapping an asset removes its cost and accumulated depreciation and books the gain or loss.

Also called: property, plant and equipment · PPE · non-current assets · الأصول الثابتة

Example

Al Noor buys a delivery van for 120,000.00 with a four-year life and no residual value. It enters the register at 120,000.00, depreciates 2,500.00 a month, and after two years shows a net book value of 60,000.00. On the zakat return the 60,000.00 is deducted from the base.