Fixed assets & depreciation
Fixed asset register and straight-line depreciation for Estonian companies: capitalise purchases above €2,500, run monthly write-offs and record disposals.
Some purchases aren't really "spent" the moment you pay for them. A €3,000 laptop is still worth something next year, and the year after — so rather than hitting one month's profit with the full cost, it sits on the balance sheet as a fixed asset and is written off gradually as depreciation. Arvello handles the register, the monthly write-offs and the eventual disposal under Equipment & Assets in the sidebar.
Expense or asset?
Two questions decide it: will the company use the item for more than a year, and does it cost enough to matter? A widely used benchmark in Estonia is €2,500 — purchases above it are capitalised and depreciated, while cheaper items are usually expensed in full straight away, whatever their lifespan.
| Expense | Fixed asset | |
|---|---|---|
| Typical examples | Software subscriptions, office supplies, a €40 keyboard | A laptop, a van, an office renovation |
| Effect on profit | Full cost in the month it's incurred | Spread over the useful life as monthly depreciation |
| Where it's recorded | Purchase invoices | A purchase invoice booked to Fixed assets, then Equipment & Assets |
Buying an asset on a purchase invoice
When the supplier's invoice shows VAT and the company is VAT-registered, record the purchase as an expense, as for any other purchase invoice, and pick Equipment & Hardware (the Fixed assets account) as the line's category. The net then goes to Fixed assets rather than to an expense, and the VAT is reclaimed on the VAT return like any other purchase. The return also reports it on KMD line 5.2, the input VAT on fixed assets. For an asset imported from outside the EU, the supplier's invoice carries no Estonian VAT, and the import VAT is its own expense with the code Import VAT (customs declaration): book that line to Equipment & Hardware too, and it goes on lines 5.1 and 5.2 — see Purchase invoices.
Once the expense is finalised, select Add to asset register on it. The asset form opens with the name, the purchase date and the cost already filled in. The cost is the net booked to Fixed assets, without the VAT you reclaim. A discount on the invoice is spread across its lines in proportion, as the books spread it. If the supplier has credited part of it, the finalised credit notes are taken off. VAT on a line with a non-deductible code is part of the cost, so it's included. Choose the category, check the in-service date and save, and the asset depreciates from then on. For several items on one invoice that need separate assets, register each from the expense: change the name and lower the cost to that item's, and the next one starts from the cost not registered yet (an item's cost can't be more than what's left). Once the whole cost is in the register, Add to asset register goes and View asset opens the latest one, so the same cost can't be registered twice. An asset added with Add Asset on the assets page isn't linked to the expense, so register an expense's items from the expense. If the supplier credits the purchase after you've registered its asset, the asset's cost doesn't change by itself: open the asset, choose Edit details and lower the cost by the credit, so depreciation runs on what the books hold. Costs that belong to the asset but come on another invoice, such as delivery or installation, go the same way: register the asset from its purchase, then raise its cost. Register every item from that purchase first, since the cost left to register counts the assets' costs as they are now. Do either before the asset's first depreciation is booked. After that its cost is fixed, because the months already booked were worked out from it. Arvello can't yet record a later change, so ask your accountant how to treat the difference.
Registering an asset
Go to Equipment & Assets and click Add Asset. You'll enter what you bought, how much it cost (in euros, excluding any VAT you reclaim), when you bought it, and when you started using it. Picking a category sets a sensible default useful life, which you can override under advanced settings, along with a residual value — the expected worth when you stop using it, usually zero.
| Category | Examples | Default useful life |
|---|---|---|
| Computer or phone | Laptops, desktops, phones, tablets | 3 years |
| Office furniture | Desks, chairs, shelves | 5 years |
| Vehicle | Cars, vans | 5 years |
| Property improvement | Office renovations | 10 years |
| Other equipment | Everything else | 5 years |
Depreciation
Arvello uses straight-line depreciation: the cost minus residual value, divided evenly across the useful life in months. A €3,600 laptop over 36 months loses €100 a month until it's fully written off.
Each month, open Equipment & Assets → Depreciation and click Run Depreciation for the period. Arvello processes every active asset, posts the journal entries automatically — depreciation expense against accumulated depreciation — and shows you the results. If you skipped a month, running a later one books the skipped months first, oldest first, so each month carries its own share (months in a locked year, a year whose annual report is already submitted, or on or before your opening-balance date are left alone). Running the same period twice does nothing; it simply tells you depreciation has already been recorded. Each asset's page shows its current book value, the percentage depreciated, months remaining, and the full schedule with a link to every journal entry. When the book value reaches the residual value, the asset is marked Fully Depreciated and drops out of future runs.
Changing an asset's details
Use Edit details on an asset's page to change its name, type or notes at any time.
The purchase price, residual value, purchase and in-service dates and useful life can be changed only until depreciation is first recorded for the asset. After that they're locked, and they stay locked once the asset is fully depreciated or disposed of. Every month's write-off was calculated from these figures, so changing one would quietly re-base the rest of the schedule while the months already booked kept the old figures. The annual report also needs the original purchase price. The edit window shows the locked fields greyed out, with the reason.
An asset created by reconciling a bank payment also keeps the purchase price and date that payment booked, even before any depreciation. To correct them, use Undo Match on the payment in Banking and reconcile it again.
Arvello doesn't yet support changing the useful life or residual value of an asset that is already being depreciated. If an estimate changes or a figure was entered wrongly after depreciation has run, contact support.
Retiring an asset
When an asset leaves the company, use Dispose of Asset on its page and say what happened:
- Sold it — enter the sale price and date; Arvello compares it with the book value and records the gain or loss on disposal.
- Scrapped or threw it away — the remaining book value is written off as a loss.
- Gifted or transferred — for items given away or moved out of the company.
If you entered opening balances, the disposal date must fall after their date. They already include everything that happened on or before that day — an asset that left by then is already out of them, and any sale proceeds are in the bank figure — so Arvello refuses the date rather than book the disposal twice.
The disposal date can't be in the future: record the disposal once the asset has left. It also can't be earlier than the date the asset was bought, or than the last month already depreciated for it. That month's depreciation was booked while the company still had the asset, so a disposal dated before it would clear depreciation that came later.
Depreciation runs until the asset leaves the company, so before posting the disposal Arvello runs any month the asset still owes up to the month before the disposal. Sell a car on 15 February with depreciation last run in September, and October to January are booked first. The disposal month itself isn't depreciated. Months in a locked year or a year whose annual report is already marked submitted, or on or before your opening-balance date, are left alone.
An asset that has depreciation entries can't be deleted — only disposed of, which keeps the accounting history intact. Deleting is reserved for assets entered by mistake before any depreciation has run.
Finance leases
A car or machine on a leasing contract that ends with a buy-out is, in substance, the company's own: the accounting standard for leases (RTJ 9) calls it a finance lease (kapitalirent) and puts both the asset and the debt on the balance sheet. Ordinary rent, a short hire or a lease you can end at will isn't one: book its payments as an expense.
Go to Equipment & Assets → Add finance lease and enter the asset, the leasing company and the contract's figures without VAT: the asset's price, any down payment, the monthly payment and how many there are, the buy-out, and the interest rate if the contract states one. Arvello books the asset and the lease debt at the lower of the price and the payments discounted at that rate. With no rate it uses the rate the payments imply. The form shows the result before you save.
- Example. A €30,000 car with a €3,000 down payment, 60 payments of €510 and a €3,000 buy-out: €36,600 in all, €6,600 of it interest. The payments imply 8.24% a year, so the car and the debt are booked at €30,000. The first monthly payment carries €185.41 of interest (8.24% ÷ 12 on the €27,000 still owed) and repays €324.59. A contract rate of 6% would value the payments at €31,604.15, more than the price, so the price still wins.
The asset is depreciated like any other: over its useful life if the company expects to own it at the end, otherwise over the lease term if that's shorter. Only a lease the company will own at the end can keep a residual value (what it expects to sell the asset for at the end of its useful life); one that goes back to the leasing company is depreciated to nothing by the end of the term. Each lease gets its own debt account (2421 onwards). Categorise each payment in Banking as a Finance Lease Payment, and at the year end the year-end checks show the part due within twelve months as a current liability.
A lease entered by mistake can be deleted from the asset's page until its first payment, depreciation or year-end entry.
A lease where ownership passes is a supply of goods for VAT (KMS § 2 lg 5), so the leasing company invoices VAT on the asset's whole price at the start. Where ownership doesn't pass, it usually charges VAT on each instalment instead. The lease form books the asset and the debt without VAT, and Arvello can't yet book either kind of lease VAT: a lease payment with VAT on top is refused, so the VAT is never booked as repaying the debt. Don't enter the invoice's asset line as an expense: that would book the asset twice. Book the input VAT, and the payments that include it, with your accountant.
A contract fee paid when the lease starts isn't an expense either: it's part of the asset's cost (RTJ 9 p 36). The lease form has no field for it yet, so book it with your accountant too.
Writing an asset down
An asset can lose value faster than depreciation explains: water damage, a model nobody uses any more, a project that ended early. The accounting standard for fixed assets (RTJ 5) asks you to check for this at every year end, and to write an asset down to its recoverable amount when that's below its book value: the higher of what it could be sold for, less selling costs, and what using it will still bring in.
Use Write down on the asset's page, or on the annual report's year-end checks, enter what it's still worth and why. On the asset's page the write-down is dated at the end of the last month depreciation was run for, so run depreciation up to then first. Every month before it has to be run too, and so does every month after it that's been run since: a skipped month would otherwise end up in the write-down, in the wrong year. It's booked as an expense on the depreciation line (5900, against accumulated depreciation 1510), and from the next month the asset depreciates from its new value over the months its useful life has left. Keep the evidence: photos, a valuation, an offer. A write-down entered by mistake can be deleted until another month's depreciation is run after it. Reversing an earlier write-down when the value recovers isn't supported yet.
From the year-end checks the write-down is dated at the year end, even when the new year's depreciation has already been run by the time you prepare the report. From the write-down on the asset depreciates at the new rate, so Arvello corrects the months already booked: the difference is credited back to depreciation in each financial year they fall in, at its last month booked, and the schedule carries on at the new rate. An asset bought but not yet in service (bought in December, used from January) can be written down at the year end from its cost, with no depreciation to run first.
- Example. A €3,600 laptop bought in October 2026, depreciated at €100 a month, has a book value of €3,300 at 31 December 2026. In April 2027 you write it down to €1,000 at the year end: €2,300 is booked in 2026. The new rate is €1,000 over the 33 months its three-year life has left, €30.30 a month. January to March 2027 were booked at €100, so €209.10 is credited back on 31 March, and from April it continues at €30.30. 2027's depreciation comes to €363.60, and the book value at 31 December 2027 is €636.40.
An asset you've stopped using for good isn't written down but disposed of (Dispose of Asset).
At year end
The balance sheet in your annual report shows assets at their book value, so depreciation needs to be run through to the final month of the financial year before you prepare it. The year-end checklist includes this step.