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Depreciation – fixed assets

Fixed assets are a companies belongings for use in the production of goods and services – ref the
Norwegian Accounting Act § 5-1

When procurements are done in a company, the entire purchase is booked on a balance account.
The cost will be booked monthly with a rate according to what the purchase is. It is a difference
between tax depreciation and accounting depreciation, but in the following we will only look into the
accounting depreciation.

According to the Norwegian tax-act § 14-40, procurements that are significant and lasting shall be
activated. Procurement is lasting when it is meant to last for more than 3 years.

A procurement that has a net value of minimum 15.000 is considered significant and must be
activated and the cost can be depreciated. Procurements with a lower value than 15.000 shall be
booked directly to a cost account.

The main reason for depreciation is to spread the cost on the lifetime of procurement. The tax
authorities have defined the expected lifetime of different procurements.

There are different depreciation groups according to the nature of the purchase, and they are
divided as in the following – The Norwegian tax act § 14-41:

A: Office machines (computers etc) etc 30%

B: Goodwill 20%

C: Trailers, trucks, busses, vans etc 20%

D: Cars, machines, inventory etc 20%

E: Wessel’s, Ships and Rigs 14%

F: Planes, Helicopters 12%

G: Constructions for the transferring and distribution of electricity etc 5%

H: Buildings and constructions, hotels etc 4%

I: Commercial buildings 2%

J: Fixed technical installation in buildings 10%

From the income year 2014 an additional 10% start up depreciation for group D is imposed.

Buildings that have a very simple construction and its operation time is estimated to 20 years or less
can be depreciated with up to 10%. The same also for other constructions that are expected to last
not more than 20 years.

Buildings for livestock animals (barns, stables etc) can be depreciated with up to 6%.

These are the maximum rates to be used, but it can be used lower rates – never higher.

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Fixed assets in the groups from A to D can use a common account. Fixed assets in the groups from E
to I must have separate accounts for each asset.

Example:

A company buys a new van. The van costs NOK 100 000 and is booked to the balance account 1235.
As we see from above, vans can be depreciated with 20% per year. This gives an annual depreciation
of NOK 20 000, with a monthly depreciation of NOK 1 667. This amount could be booked eg: D:6011
(cost account) and C:1236. The difference between the account 1235 and 1236 is the total
accounting value of the van (sometimes the Credit posting is done on the same account as the asset
is booked to, it depends what the consultant choses).

Assets that are not assumed to be exposed to impairments of value, as land, real estate, art, shares
and bonds are not possible to depreciate.

The chart of accounts is structured in a way that is common for all company’s and has the same
account groups. According to this the bookings for the fixed assets are given as :

Account group 1000-1099 Intangible Assets (Goodwill etc)/6020

Account group 1100-1199 Buildings, land/6000-6009

Account group 1200-1299 Cars, machines, inventory, office equipment, ships, planes etc/6010-6019

Account group 1300-1399 Financial Assets (shares, bonds etc)

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Chart of Accounts – Fixed assets

1001 – Research and development, acquired

1005 – Research and development, proprietary

1021 – Concessions, acquired

1025 – Concessions, proprietary

1031 – Patents, acquired

1035 – Patens, proprietary

1041 – Licenses, acquired

1045 – Licenses, proprietary

1051 – Trade marks, acquired

1055 – Trade marks, proprietary

1061 – Other rights, acquired

1065 – Other rights, proprietary

1071 – Deferred tax asset, gross

1075 – Reduction in deferred tax due to unrealisibility

1079 – Deferred tax asset that can be offset

1080 – Goodwill

Lasting assets

1100 – Buildings

1110 – Fixed technical installation

1120 – Structural installations

1130 – Plant under construction

1141 – Agricultural Property

1145 – Forestry Property

1151 – Land

1155 – Other real property

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1160 – Dwellings including land

1180 – Investment properties

1190 – Other fixed assets

1200 – Machinery and plant

1210 – Machinery and plant under construction

1221 – Ships

1225 – Aircrafts

1231 – Automobiles/estate cars

1235 – Vans, classification 1

1236 – Vans, classification 2

1237 – Lorries

1238 – Busses

1241 – Tractors

1242 – Forklifts

1249 – Other means of transport

1250 – Fixtures and fittings

1261 – Permanent building fixtures and fittings, own building

1265 – Permanent building fixtures and fittings, leased building

1270 – Tools etc

1280 – Other machines

1290 – Other fixed assets

1301 – Shares in subsidiaries

1305 – Units in subsidiaries

1306 – Shares/units in subsidiaries , foreign, included in the exemption model

1308 – Shares/units in subsidiaries, foreign, not included the exemption model

1311 – Shares in group companies

1315 – Units in group companies

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1318 – Shares/units in group companies, foreign, not included in the exemption model

1321 – Loans to subsidiaries

1325 – Loans to other group companies

1330 – Investments in associated companies

1341 – Loans to associated companies

1345 – Loans to joint ventures

1351 – Other shares, Norwegian

1355 – Other units, Norwegian

1356 – Other shares/units, foreign, included in the exemption model

1357 – Other shares/units, foreign, not included in the exemption model

1358 – Securities fund units

1360 – Bonds

1371 – Receivable from owners

1375 – Receivables from board members

1381 – Receivables from employees

1385 – Receivables from employed owners

1393 – Overfunding of pension liabilities

1394 – Deposit fund

1395 – Deposits from tenants

1396 – Deposits

1397 – Prepaid leasing

1399 – Other receivables

Few companies have all these fixed assets and will not use all these accounts. The main thing is that
the asset is booked in the correct accounting group, as this will influence where in the tax
documentation the transaction will appear – and affect the companies’ final taxation. It is important
to follow up that the depreciation is done on a monthly base, as this is costs that will affect the
customers’ monthly income statement.

13.01.2014 – Karin Zerener

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13.01.2014 – Karin Zerener