Fixed assets
Learn what fixed assets are, how to record and depreciate them, and how Indonesian tax rules apply to you.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Fixed assets, or aset tetap, are physical items your business uses for more than 12 months. PSAK 216 and SAK EMKM set the accounting rules in Indonesia.
- You record them on your balance sheet and spread their cost through depreciation. SAK EMKM allows straight-line or declining balance, with no residual value required.
- PMK 72/2023 sets tax useful lives and rates for four asset groups plus buildings. Depreciation lowers your tax only if you keep full books.
- A register and yearly checks keep your records accurate. Indonesian tax law requires you to keep your books for 10 years.
What are fixed assets?
Fixed assets are long-term physical items your business owns and uses to earn income for more than 12 months. In Indonesian, they're called aset tetap.
The Indonesian standard for them is PSAK 216 Aset Tetap, the renumbered PSAK 16. The new number took effect on 1 January 2024, with the rules largely unchanged.
Accountants also call them property, plant and equipment. They're one type of business asset and sit under non-current assets on your balance sheet.
Why fixed assets matter for your business
These items show how much you've invested in long-term capacity, and tracking them helps you plan replacements. With full books for tax, depreciation reduces your taxable income. On the 0.5% final tax, it doesn't change what you pay.
Key characteristics of fixed assets
Five traits separate these items from everyday expenses. An item usually needs all five to count.
Tangibility
They have a physical form, such as a delivery truck or a coffee roaster. Patents and trademarks are intangible assets, so you record them separately.
Long useful life
The item brings economic benefit for more than one accounting period, usually more than 12 months. A laptop you'll use for three years qualifies, while this week's printer paper is an expense.
Not intended for resale
You buy these items to use them. A truck that delivers your goods qualifies, while the cars in a dealer's showroom are stock for sale.
Capitalisation and depreciation
You record the cost on your balance sheet as an asset. Depreciation then spreads it across the periods the asset helps you earn income.
Illiquidity
Selling a building or a production machine can take months. That's why these items sit in the non-current section of your balance sheet.
Examples of fixed assets
What you own depends on your industry. These are the categories small businesses in Indonesia see most often.
- Land you own for business use, which doesn't depreciate
- Buildings such as shophouses (ruko), offices and warehouses
- Vehicles such as delivery trucks, motorbikes and company cars
- Machinery and tools, such as production machines and measuring devices
- Computer equipment such as laptops, servers and printers
- Office furniture and fittings such as desks, shelving and lighting
- Leasehold improvements, such as renovations to a rented shop that add lasting value
Some costly or long-lasting items belong elsewhere. Stock you hold for sale is a current asset, and software licences are intangible assets. Low-cost consumables such as stationery are expensed when you buy them.
Fixed assets vs current assets
Your balance sheet splits assets into two groups: fixed (non-current) and current. The split shows what you can turn into cash soon.
Current assets are items you expect to use up, sell or turn into cash within 12 months. They include cash, inventory, accounts receivable and prepayments.
Long-term assets stay on your books for more than a year and lose value through depreciation. Current assets give you short-term liquidity, which you can measure with liquidity ratios. For a side-by-side view, see current and fixed assets compared.
When to capitalise a fixed asset
You capitalise a purchase when it passes the recognition tests and your own cost threshold. Deciding at purchase keeps your profit accurate.
The recognition tests
Accounting standards use two tests to decide whether to recognise an asset. You record a purchase as an asset when:
- it's probable the item will bring future economic benefits to your business
- you can measure its cost reliably
Setting a capitalisation threshold
A capitalisation threshold is a rupiah amount below which you expense purchases straight away. Agree on a figure with your accountant, for example Rp5.000.000, and apply it consistently.
What's included in the cost
You capitalise the purchase price plus costs needed to get the asset ready for use, such as delivery, installation and import duties. Running costs such as fuel and routine servicing are expensed as they happen.
How fixed assets are recorded in your accounts
An asset shows up in each of your main financial statements during its life. Here's where it appears and the entries you'll make.
Recording the purchase
Your first journal entry moves the cost onto your balance sheet. For a Rp120.000.000 delivery truck bought on credit, you'd record:
- a debit of Rp120.000.000 to your vehicles account
- a credit of Rp120.000.000 to accounts payable, or to your bank if you paid upfront
Where fixed assets sit on the balance sheet
They appear under non-current assets at net book value, which is cost minus depreciation to date.
Accumulated depreciation
Each period, you debit depreciation expense and credit accumulated depreciation. The running total becomes your accumulated depreciation balance, which sits against the asset's cost.
The income statement and cash flow statement
Depreciation is an expense on your income statement, so it lowers profit without any cash leaving your business. The purchase price and any later sale proceeds appear under investing activities in your cash flow statement.
Depreciation of fixed assets
Depreciation spreads an asset's cost over its useful life. It keeps your profit realistic, instead of showing a big loss in the purchase year.
Depreciation methods under SAK EMKM
Private businesses without public accountability can use SAK EP, which replaced SAK ETAP from 1 January 2025. Micro, small and medium businesses can use SAK EMKM, which allows two methods with no residual value required.
- Straight-line depreciation records the same charge each year
- Declining balance depreciation applies a fixed percentage to the remaining book value, giving larger charges early on
Depreciation starts when the asset is ready for use. Declining balance often suits vehicles and technology, which lose value fastest when new.
How to calculate straight-line depreciation
Here's how to work it out for a Rp120.000.000 delivery truck. You expect to use it for eight years.
- Add up the total cost, including delivery and setup: Rp120.000.000.
- Estimate the useful life: eight years.
- Divide the cost by the useful life: Rp120.000.000 ÷ 8 = Rp15.000.000 a year.
- Record the charge each year. After two years, the truck's net book value is Rp90.000.000.
With declining balance at 25%, you'd record Rp30.000.000 in year 1 and Rp22.500.000 in year 2.
Assets that don't depreciate
Land doesn't wear out, so you don't depreciate it. If you buy a property with land and a building, split the cost and depreciate only the building.
Tax depreciation for fixed assets in Indonesia
Tax depreciation follows PMK 72/2023, in force since 17 July 2023. It covers tangible assets other than land that you use to earn income for more than one year.
PMK 72/2023 asset groups and rates
The Directorate General of Taxes (DJP) publishes the groups and rates. Buildings use straight-line only; other assets can use either method.
- Group 1 assets have a four-year useful life, at 25% straight-line or 50% declining balance
- Group 2 assets have an eight-year useful life, at 12.5% straight-line or 25% declining balance
- Group 3 assets have a 16-year useful life, at 6.25% straight-line or 12.5% declining balance
- Group 4 assets have a 20-year useful life, at 5% straight-line or 10% declining balance
- Permanent buildings have a 20-year useful life, at 5% straight-line
- Non-permanent buildings have a 10-year useful life, at 10% straight-line
Laptops and computers are listed in Group 1 of the regulation's annex. A Rp16.000.000 laptop gives you Rp4.000.000 a year for four years using straight-line, or Rp8.000.000 in year 1 using declining balance.
When tax depreciation starts
It usually starts in the month you make the expenditure. Assets under construction start in the month they're completed, and unused assets can start when first used, with DJP approval.
How the 0.5% final tax affects depreciation
Under PP 20/2026, in force since 22 April 2026, some businesses can use the 0.5% final tax with no time limit. It's open to individuals, PT Perorangan and cooperatives with turnover up to Rp4.8 billion a year.
Newly registered CV, firma and PT can't use it and pay standard corporate income tax. Because the final tax is worked out on gross turnover, depreciation doesn't reduce what you pay.
You'll still record depreciation in your accounts to keep your balance sheet accurate. Speak with a tax adviser or accountant to confirm which regime applies to you.
The fixed asset lifecycle
Every asset moves through four stages. Knowing each one helps you plan ahead.
Acquisition
You record the full cost and set a useful life and depreciation method.
Use and maintenance
Routine repairs are expenses. Major improvements that add life or capacity can be added to the asset's cost.
Review and impairment
Review your assets at least once a year. If damage or obsolescence pushes an asset's value well below book value, you may need to record an impairment loss.
Disposal
When you sell or scrap an asset, you remove its cost and accumulated depreciation from your books. Any difference between the sale price and net book value is a gain or loss.
For tax, businesses on normal bookkeeping follow UU PPh Article 11(8). Sale proceeds count as income, and the remaining tax book value is a loss that year. If you use the 0.5% final tax, ask your tax adviser how a sale is treated.
How to calculate net fixed assets and fixed asset turnover
Two quick calculations show how much value your assets hold and how hard they're working.
Net fixed assets
Net fixed assets = total cost − accumulated depreciation. If your truck (Rp120.000.000) and equipment (Rp80.000.000) have Rp40.000.000 of accumulated depreciation, your net fixed assets are Rp160.000.000.
Fixed asset turnover
Fixed asset turnover = net sales ÷ average net fixed assets. Say opening net assets are Rp200.000.000, closing net assets Rp160.000.000 and net sales Rp900.000.000.
- Add opening and closing balances: Rp200.000.000 + Rp160.000.000 = Rp360.000.000.
- Divide by two to get the average: Rp180.000.000.
- Divide net sales by the average: Rp900.000.000 ÷ Rp180.000.000 = 5.
A ratio of 5 means each Rp1 in assets brought in Rp5 of sales. A falling ratio over several years can signal idle equipment.
Fixed asset management for small businesses
A little structure saves you time at year end and shows exactly what your business owns.
Keeping a fixed asset register
A register lists every asset with its description, location, purchase date, cost, depreciation method, useful life and net book value. Your accountant will use it at year end.
Tracking depreciation
Fixed asset software can calculate the charges for you, so you spend less time on spreadsheets.
Running yearly physical checks
Once a year, check that each item in your register still exists and works. Remove anything lost or sold, and flag damaged items for an impairment review.
Planning for replacements
Watching remaining useful life lets you budget for replacements before they're urgent, especially for trucks and machinery.
Keeping records for 10 years
Under UU KUP Article 28(11), you must keep your books and supporting documents in Indonesia for 10 years. That includes purchase invoices, your register and disposal paperwork.
Track your fixed assets with Xero
Clear records help you plan purchases with confidence. Xero keeps your fixed asset register and calculates depreciation automatically, so your balance sheet stays up to date.
You can also invite your accountant or bookkeeper to work in your books in real time. Try Xero today and get one month free.
FAQs on fixed assets
Here are quick answers to common questions from Indonesian business owners.
Is inventory a fixed asset?
No, inventory is a current asset because you hold it for sale. If you take an item out of stock to use long term, such as a display fridge, reclassify it at cost.
Is a car a fixed asset?
Yes, if your business owns it and uses it for more than a year. If you also drive it privately, ask your tax adviser how to treat the personal-use share.
Are intangible assets fixed assets?
Intangible assets such as software licences and franchise rights are long-term, but you record them separately because they lack physical form. For tax, PMK 72/2023 also covers their amortisation.
Can fixed assets increase in value?
Land and buildings can rise in market value, and PSAK 216 lets businesses choose a revaluation model to reflect that. SAK EMKM uses the cost model, so assets stay at cost less accumulated depreciation.
What's the difference between fixed assets and aset tetap?
They're the same thing: aset tetap is the Indonesian term and the title of PSAK 216. You'll also see the older term aktiva tetap in textbooks and search results.
What records should you keep for fixed assets?
Digital copies count, because the 10-year rule covers electronic records, so you can store scanned invoices in cloud software. Keep insurance policies and warranties too, as they support claims and disposals.
Related terms
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.