Fixed Assets — why an oven is not inventory¶

What this covers. A restaurant owns two very different kinds of valuable "stuff": consumables that flow through and get used up (flour, dough, packaging), and durable assets that the business uses to operate for years (the combi oven, the dough mixer, the walk-in fridge). This chapter is about the second kind. It explains why a durable asset gets the capitalized-and-depreciated treatment instead of being held as stock; how an oven is bought through the same purchasing path as flour yet never becomes stock; and how that treatment routes such a unit into a separate fixed-asset sub-ledger with its own list and its own cost machinery. Then the world end to end: the asset register — the list of what the company owns — and the separate decision of whose books carry each unit; depreciation spread over an asset's life; disposal with a gain or loss when it's retired or sold; the dated transfer that hands a unit from one warehouse's books to another's; and the count — the same walk that counts the flour — that confirms each serial is still there.

1. Why fixed assets are not inventory¶

A restaurant owns two very different kinds of value, and accounting treats them as two separate worlds. Conflating them is one of the classic ways a small operator's books go wrong. The dividing line is a single question:

Does this thing get consumed to produce output, or does it produce output over many years?

Flour is consumed. Every kilogram you receive is destined to leave the building as part of a dish, and its entire cost belongs to the period in which it is eaten. The oven is not consumed. You buy it once, and it bakes thousands of dishes over a decade. Charging the oven's full price to the month you bought it would crater that month's profit and flatter every later month's profit — yet the oven helps earn revenue for ten years. So its cost must be spread across those ten years. That spreading is depreciation (the periodic recognition of a slice of a durable asset's cost as it is used up), and it is the entire reason fixed assets need their own machinery.

The differences cascade from there. They are worth seeing side by side, because every later section is one row of this table made concrete:

Dimension	Stock (a consumable)	Fixed asset (a durable unit)
What it is	consumables that flow through and are used up	durable assets the business uses to operate
When the cost is recognized	charged to cost of goods sold (COGS) when consumed	capitalized when bought, then depreciated to expense over its useful life
What it's worth	the weighted-average cost of a fungible pool, re-blended on every move	per-asset book value = cost − depreciation taken so far, falling on a schedule
Identity	fungible — one kilogram of flour is interchangeable with another	a specific unit — this oven, usually with a serial number
Where it's recorded	the stock-movement journal	the fixed-asset sub-ledger (asset register + depreciation schedule)
The truth event	the warehouse's periodic count — quantities in each storage location	the same warehouse's count — each serial ticked off on the same walk
Selling it	stock leaving the warehouse at its average cost	an asset disposal with a computed gain or loss

A few terms in that table, defined in one line each, because the rest of the chapter leans on them:

Capitalize — to record a purchase as an asset on the books (something the business owns and still holds) rather than as an expense (a cost used up this period). The oven's price is parked as an asset, not burned this month.
Weighted-average cost — the single blended cost of a pool of identical units; when you receive more at a different price, the pool's average shifts. (It's how consumables are valued; a fixed asset never uses it — see §6.)
Cost of goods sold (COGS) — the cost of the ingredients that left the warehouse to make what you sold. Consumables land here when eaten; an asset's depreciation is a different kind of expense entirely.

Because the two worlds are genuinely different, the model keeps two genuinely separate ledgers. Giving an item the capitalized-and-depreciated treatment is the switch that sends it down the fixed-asset path instead of the stock path — and once it goes, none of the stock valuation machinery applies. No on-hand quantity. No weighted-average cost. No warehouse cost pool. No "stock leaving the warehouse" when it's sold.

What the two worlds do share is the walk. The same person, on the same warehouse's count, weighs the flour and ticks the oven off by its serial — because both are that warehouse's responsibility, and there is no sense in sending someone through the same building twice. What they never share is the arithmetic: the flour's count moves quantity and re-prices a pool, while the oven's tick moves nothing at all and merely confirms that a register row still corresponds to something you can touch.

This is not a Sizl invention. Separating consumables from capitalized assets, and depreciating the latter over their lives, is bedrock accounting and a standard module in every mature business system. The model adopts the well-worn pattern by name; it does not re-derive it.

2. The switch that sends an item here — the capitalized-and-depreciated treatment¶

Every item carries exactly one accounting treatment, and that single choice decides which world the item lives in. There are four:

Accounting treatment	World it routes to	Where its cost lands
stock-tracked	the stock ledger — counted, valued at weighted-average cost, reconciled at each period close	cost of goods sold when consumed
expensed-on-receipt	non-stocked — no on-hand, no count, no valuation	expensed the moment it's received
expensed-on-write-off	the stock side — a per-warehouse implements pool that accumulates durable smallwares at landed cost, never depreciated, with no register entry	implement write-off expense, the day a unit is written off, transferred out, or found short
capitalized-and-depreciated	the fixed-asset sub-ledger (this chapter)	capitalized, then depreciated over its useful life

How a treatment is chosen, defaulted, and locked is taught in Item model & policies. Two consequences of the capitalized treatment matter right here:

It is "is-capitalized." That derived fact — true precisely when the treatment is capitalized-and-depreciated — is the single thing every fixed-asset rule keys off. It is never decided by reading a category's name ("is the category called Equipment?"), because a category is a user-editable label an operator can rename or translate; behavior that hangs off a label silently breaks when the label changes. The treatment is an explicit, stable property of the item itself.
It is bought like anything else. A capitalized item is ordered on a purchase order and received on a goods receipt exactly like flour or napkins — there is no separate capital-purchase pathway, and the new oven arrives on a delivery alongside the consumables. What the treatment changes is what receiving the line does: a stock-tracked line posts a stock movement into a warehouse's pool, while a capitalized line creates an asset-register entry instead (§5). And because the purchase flows through ordinary procurement, the line participates in the order-vs-invoice match like any other — a €4,500 oven invoice is exactly the kind of line worth matching (see Procurement). The one procurement habit an asset skips is the automatic reorder plan: pars and reorder points apply to stocked consumables, so an oven is added to an order by hand, not proposed by the replenishment engine.

2.1 The materiality line — when a "tool" is an asset and when it's just an expense¶

Not every durable-looking object becomes a fixed asset. The split is on materiality — is the cost big enough to be worth spreading? — not on what category it sits in. There are three tiers, not two:

A durable, material tool — a €4,000 oven, an €800 mixer — is capitalized-and-depreciated → it enters this sub-ledger.
A durable but immaterial tool — a €40 frying pan, a knife, a tray — is an implement (expensed-on-write-off): it accumulates in a quantity-and-value pool on the stock side, is counted like any other quantity, and its cost is recognized the day it breaks or goes missing — no depreciation schedule, and deliberately no register entry, so a drawer of forty pans never drowns the asset register. (Taught in Item model & policies §4.)
A low-value, short-lived supply — a €12 whisk, gloves, brushes — is expensed-on-receipt → its cost is taken the moment it arrives, and nobody ever counts it again.

The reason is pure pragmatism. Tracking a €12 whisk on a depreciation schedule — computing its monthly slice for years, ticking it off on every walk — is ceremony with no payoff: the whisk's whole cost barely moves the books whenever you recognize it. Below a sensible value threshold, a tool is simply expensed and forgotten (the expense itself still reaches the operator's accounting system — see Financial boundary). Above it, the cost is large enough that when you recognize it actually matters, so it earns a place in the register and a depreciation schedule.

Worked example. Two purchases on the same delivery. A €4,000 combi oven → capitalized → one asset-register entry, depreciated over five years. A box of ten €12 whisks → €120 expensed-on-receipt, nothing in the register. Same supplier, same goods receipt; different treatment, because one is material and one is not.

2.2 An asset is identified, not fungible¶

An asset is rarely interchangeable. You care which oven failed its safety check, which mixer is still under warranty, where a specific fridge is installed. So a capitalized item is tracked by serial — each physical unit is one row in the asset register, with its own serial number, its own cost, its own depreciation. (A fleet of identical, anonymous tools could in principle be tracked as a bare count, but the working assumption for a restaurant's assets is one register row per serialized unit.) This is the opposite of flour, where the whole point is that one kilogram is exactly as good as another.

One wording trap is worth disarming, because the stock world uses the same phrase: "tracked by serial" here means one register row per physical unit. It is not the stock ledger's by-serial tracking granularity — that one is a batch-of-one in the lot machinery, for stock that is received, counted, and consumed. A capitalized item never enters the stock ledger at all, so lots never exist for it; its serial lives on the register entry, and that entry is the unit's identity for its whole life. The question that picks the mechanism is the usual one: does it depreciate, or is it consumed?

3. The asset register¶

The asset register is the sub-ledger's master list: one row per physical asset the business owns and has capitalized. It is the fixed-asset counterpart of the stock on-hand list — with one deep difference. Stock on-hand is derived from a journal of movements (it's a running total you compute, never a number you store). The register is the other shape: a roster of identified things, each one carrying its own cost and its own running depreciation as attributes of that row.

Each register entry — one combi oven, one specific mixer — answers a handful of questions:

Which unit is this, and what is it? An asset code, a serial number, and the kind of asset it is an instance of (a combi oven, a stand mixer).
What did it cost to put into service, and when did that start? Its capitalized cost and its in-service date — the day it was placed into service, which is when the depreciation clock starts ticking (and which can be later than the day it arrived). That date is empty while the asset is still only acquired.
How is its cost spread? Its useful life and its salvage value — the two levers of the straight-line spread (covered in §4).
What is it worth now? Its depreciation taken so far and its current book value (= capitalized cost − depreciation taken so far) — the asset's carrying value on the books today.
Where is its life now? Its status — acquired (received but not yet placed into service), in service, or disposed — plus disposal details once retired. Three states, and no fourth: an asset is on the books or it is off them.
Whose books carry it, and where is it? The warehouse that has taken the unit onto its books and the date it did so, the storage location inside that warehouse that has custody, and a free-form note for whereabouts no dictionary can hold. All three may be empty: a unit can be owned, and costed, while no warehouse's books carry it. The next section is about that, because it is the fact everything in §7 and §8 turns on.

3.1 Capitalized cost is the full cost to put it into service¶

A subtle but important rule: the capitalized cost is not just the sticker price. It is everything spent to get the asset working — purchase price plus delivery, installation, and commissioning. The asset isn't earning anything until it's installed and running, so the cost of getting it there is part of the asset, not a separate expense.

Worked example. You buy a combi oven priced at €4,000, pay €300 to have it delivered and €200 to have it installed and commissioned. Its capitalized cost is €4,500 — and €4,500 is the figure depreciation will spread over the oven's life, not €4,000.

(This mirrors the "landed cost" discipline the stock side uses when receiving consumables — the freight and handling that come with a delivery are folded into what the goods are worth. The difference is where it lands: for an asset it becomes the asset's cost basis, not part of a weighted-average pool.)

3.2 Whose books carry it — a decision, not a birth fact¶

The register answers one question: what does the company own? Whose books carry each unit is a second question, and the model keeps the two apart. A unit is registered when the business acquires it, and placed when somebody decides which set of books answers for it. Often both happen in one breath — an oven received on a delivery lands on the books the receipt line points at — but they are not the same act, and a business onboarding a shed full of assets needs the first long before it can honestly do the second.

When a unit is placed, it is placed on exactly one warehouse, as of a date — and that warehouse is the asset's accounting contour: the unit of the business that counts, reconciles, and closes a set of books (see Scope & locations).

Why a warehouse, of all the labels a business has? Because the warehouse is the only grain that has the two things an asset needs from an owner:

A count. Somebody walks it on a schedule, and that walk is where a serial gets confirmed (§7).
A close. A period gets sealed there, and a close is the one moment strong enough to refuse — to say "you cannot publish this period while a €600 unit on your books is unaccounted for."

A restaurant has neither. A restaurant is a profit center — the business unit whose margin you measure. It is never counted and never closed, so it could not verify a serial even in principle. Hanging assets off it would produce a register that nobody's routine ever checks, which is precisely how a business ends up carrying value for units that left the building years ago.

An unplaced unit is in nobody's warehouse. The company owns it and the register knows what it cost, but no set of books has taken responsibility for it — and everything that follows from responsibility is simply absent. No count offers its serial to be ticked. No close asks anyone to go and find it. It accrues no depreciation, because a unit still in its box is not in service and the clock that spreads its cost does not start until some warehouse's books stand behind it. Its value is the company's own, sitting outside every warehouse's balance until the day it is placed.

That state is deliberate, and it is what makes onboarding honest. The stricter-looking alternative — demand a warehouse the moment a unit is registered — is worse: an operator entering forty units from an old spreadsheet has to guess forty times, and a guess puts a serial on a walk that nobody performing that walk expects to see. Saying nothing about which books carry a unit is a truthful answer to a question nobody has asked yet. What keeps the state from being a hiding place is the other side of the same rule: an unplaced unit cannot be put into service, so nothing depreciates into anyone's expense until a set of books has claimed it.

How a unit gets placed. A goods receipt places as it registers: the line names the warehouse whose books take the unit, so an asset bought through the system is never unplaced (§5). For a unit that was already in the building before the books began, placement rides the opening count — the same document by which a warehouse starts keeping stock, asserting what its storage locations hold and taking on the units it answers for in one gesture (§5.1). After that, handing a unit from one warehouse's books to another's is a transfer (§8), and a transfer is also how a misplacement is put right: the unit goes to the books that should have had it, on a date both closes can honor. There is no gesture that un-places a unit — once a set of books has answered for one, some set of books always does, until it is disposed. Undoing the document that placed it is a different matter: cancelling or amending an opening count retracts everything that count asserted, the assets it took on included, and a unit it had placed is owned-but-unplaced again. That retraction stops where responsibility has already begun: a unit those books have since put into service stays on them, because an expense already accruing cannot be left belonging to nobody — and once a close has sealed the period the count sits in, nothing of it can be taken back at all.

register a unit    owned, on nobody's books, not depreciating
place it           this warehouse's books carry it, from this date
transfer it        those books hand it to another warehouse's
dispose it         nobody's books carry it again

Below the contour sit two softer rungs, and the difference between them is worth learning once:

warehouse              the contour: valued, reconciled, closed   set when the unit is placed
  └ storage location   the custody point: "bar", "walk-in"       optional
      └ note           anything a dictionary can't hold          optional, free text

The storage location is the person-place that has custody: the walk-in, the bar, or the back office. It has a quantity truth and its own count, but no separate value pool; the warehouse's books still carry the asset. An asset without a named custody point belongs to the warehouse's default storage location.

The note is for everything the dictionary will never contain. "The tablet is with Vasya." "Out with the technician until Friday." Real operations are full of whereabouts like that, and the honest answer is a sentence, not a taxonomy. The rule that keeps this from becoming a mess: only the contour has consequences. Move the asset between contours and the books change hands, on a date, on a document (§8); move it between storage locations inside one warehouse and custody changes without any value changing hands.

Both kinds of move can be written down, and which one you reach for is a question about the move, not about the register. A custody point that was simply recorded wrong is put right where custody is edited, and nothing more is owed — no value moved, so there is nothing for a document to say. A move that actually happened, and that somebody will ask about later — the walk-in cleared out, the whole prep station carried down to the cellar — can ride the same dated document that carries the stock that moved with it (§8). The register ends up saying the same thing either way; what differs is whether the business wanted the move on the record.

4. Depreciation — spreading the cost over the asset's life¶

Depreciation is the periodic act of moving a slice of an asset's capitalized cost from the books (where it sits as book value) into expense (where it reduces profit). It answers the question "how much of this oven did we use up this period?" Two levers shape it: the policy (how long the cost is spread, and down to what floor) and the schedule (the actual slice for each period). A few more one-line terms first:

Useful life — how long the asset is expected to earn its keep (a combi oven, say, five years). The window the cost is spread across.
Salvage value (also called residual value) — what the asset is expected to be worth at the end of its useful life. You only spread the part of the cost you actually expect to use up, so depreciation never takes book value below salvage.
Depreciable base — the part of the cost that gets spread: capitalized cost − salvage value.

4.1 Straight-line — the same slice every period¶

Depreciation here is straight-line: the depreciable base spread evenly, the same expense every period across the useful life. Simple, predictable, and right for assets that wear evenly — which a restaurant's fixed assets overwhelmingly do.

Two conventions shape the schedule:

Full-month convention. Depreciation begins in the in-service month, not on the in-service day. An oven installed on the 28th of October accrues a full October slice, the same as one installed on the 1st. The in-service month is month 1; the final month is month useful-life.
Exact-remainder final month. Each standard slice is rounded to the nearest cent (Round(base ÷ life, 2)), which means rounding error accumulates over the asset's life. Rather than a formula that slightly over- or under-depreciates the asset, the last slice is whatever is needed to make the total exactly equal to the depreciable base — so the Σ of all entries always reaches cost − salvage to the cent.

Worked example. Combi oven, €4,500 capitalized cost, €500 salvage value, 5-year (60-month) useful life, straight-line, depreciated monthly. - Depreciable base = €4,500 − €500 = €4,000. - Standard slice = €4,000 ÷ 60 = €66.67/month (rounded to the cent). - After 12 months: depreciation taken €800.04, book value €3,699.96. - After 60 months: the final month adjusts so Σ entries = exactly €4,000; book value €500 — the salvage value, where depreciation stops.

Exact-remainder check. 59 months × €66.67 = €3,933.53; final month = €4,000 − €3,933.53 = €66.47 — so the life totals €4,000.00 to the cent.

Shorter worked example for the pattern. An asset costing €1,000 with 7-month life, zero salvage, straight-line monthly: Standard = Round(€1,000 ÷ 7, 2) = €142.86. Months 1–6 → €142.86; month 7 → €1,000 − 6 × €142.86 = €142.84. Σ = €1,000.00 ✓.

Accounting knows other shapes — accelerated methods such as declining-balance that front-load the expense, and usage-based methods that track machine-hours instead of the calendar — and every jurisdiction layers its own tax-depreciation rules on top (in the US, the accelerated MACRS tax schedules; in Portugal, the fiscal depreciation tables). All of that is deliberately not here: book-vs-tax depreciation choices are the territory of the operator's accounting system and accountant. This register keeps one simple, predictable book figure per asset — straight-line — and exports the resulting depreciation expense for the accountant to work with (see Financial boundary).

4.2 The depreciation run — posting it period by period¶

Depreciation isn't recognized continuously; it's posted by a periodic depreciation run that fires on the first of each month. The run walks every in-service asset and posts each month's slice up to — but not including — the current calendar month (only completed months post; the current month has not finished yet). Each asset × month pair posts exactly once: if the run fires again for the same period, it sees the entry already there and skips it, so an accidental second run is harmless.

Crucially, the run is catch-up by construction. It doesn't just advance by one month — it posts every missing eligible month from the in-service date all the way to the cap. That means:

A backdated in-service date heals the next time the run fires (every month back to the in-service date posts in one sweep).
A missed run (job failure, maintenance window, new company onboarded mid-year) heals automatically the next time the run succeeds — no manual back-fill needed.

Only disposal stops accrual. The run asks one question about each asset — is it in service and not yet disposed? — and nothing about where the unit physically is changes the answer. An asset nobody could find on the last walk is not a special depreciation case: it is either found, and keeps its ordinary schedule, or disposed, and stops (§6, §7.1). There is deliberately no third state in which a unit is written off the walk yet quietly keeps accruing expense; that state is exactly how a unit stays on the books for years after it left the building.

The depreciation run is its own clock, and it is worth being precise about what that does and does not mean now that assets sit on a warehouse's books:

The depreciation run is a pure calendar machine over the register. It counts nothing, touches no cost pool, and asks no question about what is physically standing in any storage location. It simply advances each asset's schedule month by month, and it never waits for a warehouse to close.
The warehouse's count and close is where the register gets verified: the count confirms each serial, and the close refuses to publish while a serial on the books went unconfirmed (§7).

So the money machinery runs on the calendar and the truth machinery runs on the walk. A late count never stalls depreciation, and a depreciation run never asserts that an asset is still there.

Worked example — one monthly run. The monthly run fires. The combi oven (straight-line, €66.67/month, in service since January) has January–February already posted. The run sees March is completed and unposted: it posts €66.67 of March depreciation. Depreciation-taken rises, book value falls, and €66.67 of depreciation expense is recognized for March. In the same sweep the mixer, the fridge, and every other in-service asset get their March slice. Disposed assets are skipped; fully-depreciated assets (sitting at salvage) are skipped. None of this waits for, or depends on, any warehouse's count.

5. Acquisition — how an asset enters the register¶

An asset joins the register through ordinary purchasing. The oven is ordered on a purchase order, arrives with the delivery, and is received on a goods receipt — the same documents every consumable flows through (see Procurement). The difference is entirely in what posting the receipt line does. For a capitalized line, posting the receipt:

Creates a register entry for the physical unit — its serial, the kind of asset it is, the warehouse whose books will carry it, and, if the line says so, the storage location inside that warehouse that took custody of the unit.
Sets its capitalized cost — the line's full landed amount (purchase price, delivery, and any non-recoverable tax — the same basis as stock, §3.1) — and its depreciation policy: useful life (defaulting to 60 months; the operator adjusts from the register) and salvage value (defaulting to zero). The spread is straight-line (§4.1).
Leaves it acquired, not yet in service. The asset is now on the books — capitalized, owned, carried at its full cost — but it is not depreciating. A newly delivered oven often sits crated for days or weeks before it is installed and commissioned, and its cost should not begin to spread until it actually starts earning. So the depreciation clock does not start at receipt.

A separate step — placing the asset into service — starts that clock. Whoever installs and commissions the oven records the day it goes live; that day is the in-service date, depreciation begins from its month (§4), and the schedule catches up to the present immediately, so the asset's book value is correct from that moment on. A unit that is plugged in and running the day it arrives can be placed into service right on the goods receipt; one that waits in storage is placed into service later and accrues nothing in between. Until it goes live the asset stays acquired — which is also exactly the window in which its cost can still be corrected (below).

Going live has one precondition: some warehouse's books must already carry the unit (§3.2). Depreciation is an expense, and an expense has to belong to a set of books that answers for it — so a unit no warehouse has taken on cannot be in service, which is also the plain physical truth about an asset still in its crate.

Because an asset is always a single, identified unit, a capitalized goods-receipt line must contain exactly one unit — receiving three ovens on one line is not permitted; each has its own serial, its own register entry, its own cost.

The line names the contour. One delivery routinely feeds more than one set of books: the combi oven for the asset warehouse, thirty kilos of flour for the dry store, a case of wine for the bar. So the line, not just the document, decides where its goods land — a receipt carries a default warehouse and any line may point somewhere else. For a capitalized line, that warehouse is the one whose books take the asset, and the storage location it is put away in becomes the unit's custody point. Nothing is routed automatically: if a business keeps a dedicated asset warehouse, the operator points the oven's line at it. The system never guesses which books should carry a €4,500 unit. Because the line always names one, a purchase registers and places the unit in the same posting — the register never has to wonder whose books a delivered oven landed on.

And because the purchase ran through procurement, the supplier's invoice is matched against the order like any other line — a €4,500 discrepancy on an oven is exactly what the order-vs-invoice match exists to catch.

Invoice retrofit of the cost basis. When the supplier's invoice arrives and its price differs from the receipt's estimated price, the cost basis of a consumable is updated via the stock valuation machinery. For a capitalized asset the principle is the same — the true landed cost is the capitalized cost — but the timing matters. While no depreciation has yet been posted, attaching the invoice can silently correct the asset's cost basis (raising or lowering it to match the invoiced amount), and the depreciation run will then use the corrected figure. Once depreciation has started posting, the cost basis is locked — the operator sees the discrepancy on the receipt and resolves it outside the register.

The one thing the receipt line emphatically does not do is move stock. It posts no stock movement, creates no on-hand quantity, and enters no warehouse's weighted-average pool. The oven's €4,500 lands on the books as a capitalized asset and is recognized into expense only as it depreciates. This is the inventory-versus-asset divide of §1 made concrete at the moment of purchase: a sack of flour received becomes on-hand and feeds a cost pool; an oven received — on the very same kind of goods receipt — becomes a register row and feeds a depreciation schedule.

5.1 Onboarding — assets that were in service before the system¶

A running business arrives with units already years into their lives. Those assets enter the register directly, without any goods receipt — the link to an acquiring receipt line is simply empty; that link exists for assets bought after the cutover.

Enter each asset with its original facts: the full historical capitalized cost (what it cost to put in service back then, not what it is "worth" today), the original in-service date, the useful life, the salvage value — and, when it is already clear, the warehouse whose books will carry it from now on. When it is not clear, the unit is registered unplaced (§3.2): the company owns it, the register knows what it cost, and the decision about whose books answer for it waits for the document that makes such decisions — the opening count of whichever warehouse takes it on, which settles what its storage locations hold and which units it carries in the same gesture. An unplaced unit is not in service and accrues nothing; commissioning follows placement, never precedes it. Once it is placed and in service, the depreciation machinery does the rest: the run back-fills the elapsed schedule slice by slice (each slice belongs to its own month — the run is idempotent per asset and month), so the asset's book value is correct from day one — a three-year-old oven immediately shows three years of accumulated depreciation, and a later disposal's gain or loss computes against the true remaining value. Months that predate the operator's first accounting period in the system never reach the boundary export; those years already live in the operator's own accounting records.

Two corollaries worth stating. An asset already past its useful life enters fully depreciated — it sits at salvage value, the run posts nothing further, and it still appears on its warehouse's count like any other unit (§7). And resist the shortcut of entering today's remaining value as the capitalized cost with a shortened life: the ending book value would match, but the register would permanently misstate what the asset cost, and historical cost is exactly what the register exists to remember.

(The stock-side twin of this question — storage locations already full at cutover — is the opening count: the count that starts a warehouse's stock-keeping, whose lines carry the operator's quantities and unit costs — each cost pool is settled to exactly those figures, and tracked items get lots with expiry dates. That same opening count carries the serial section of §7, which is both why an unplaced unit is placed there and why a warehouse's assets are confirmed from its very first walk. See Period close and opening count in the Glossary.)

6. Disposal — retirement and sale, with a gain or loss¶

When the business is done with an asset — it dies, it's scrapped, or it's sold — it leaves the register through disposal. This is where the fixed-asset world diverges most visibly from the stock world: selling a fixed asset is not a stock sale.

Recall how a direct sale of stocked goods works (see Sales & consumption): the item leaves stock at its weighted-average cost — "stock leaving the warehouse." But a capitalized asset has no on-hand quantity and no average cost, so there is nothing to deplete. Selling the oven is an asset disposal, and its financial result is a gain or loss measured against the asset's current book value:

Gain (or loss) on disposal = proceeds − book value at disposal. Sold for more than it's carried at → a gain; sold for less (or scrapped for nothing) → a loss.

Disposing of an asset does three things:

Stops depreciation. No further schedule slices post in or after the disposal month. Depreciation through the end of the month before the disposal is the last to accrue.
Removes the asset from the register. Its cost and its accumulated depreciation come off the books; the asset's status becomes disposed. From that date it also drops off its warehouse's count — a disposed unit is nobody's serial to confirm.
Recognizes the gain or loss — proceeds minus book value — in that period.

One guard prevents dating a disposal back into already-posted depreciation: if the depreciation run has already posted a slice for the disposal month or later, the disposal is rejected with an error asking the operator to choose the current month or later. This ensures the register's history is never revised after the fact.

Worked example — sell the oven mid-life. The combi oven (capitalized €4,500, straight-line, €66.67/month) is sold after 24 months for €3,000. - Depreciation taken = 24 × €66.67 ≈ €1,600. - Book value = €4,500 − €1,600 = €2,900. - Gain on disposal = €3,000 − €2,900 = +€100 gain.

Worked example — scrap the same oven instead. The oven dies at month 24 and is hauled away for nothing. - Proceeds = €0; book value = €2,900. - Loss on disposal = €0 − €2,900 = −€2,900 — the whole un-depreciated remainder is recognized as a loss in that period.

This is exactly why "we sold the old oven" must never be entered as a stock sale. A stock sale would try to deplete an on-hand quantity that doesn't exist, and it would never compute the gain or loss the books actually need. Disposal is its own action against the register. The gain or loss itself, like the depreciation expense of §4, is one of the conceptual accounts exported to the operator's accounting system (see Financial boundary).

Disposal is also one of the exactly two answers to an unconfirmed serial at a close — the subject of the next section.

7. The truth event — the warehouse's own count¶

A perpetual stock book is a claim about what each storage location holds, and that claim has to be reconciled to physical reality by a periodic count. The asset register is a claim too — "these books carry 37 units, and here is each one's book value" — and it is reconciled the same way, on the same walk, in the same document.

A warehouse's count therefore has two sections. Quantities for everything measured: consumables weighed and counted, implements checked against the book. Serials for everything identified: one row per asset the warehouse's books carry, and a checkbox.

one walk of the main warehouse · count dated 30 Jun
───────────────────────────────────────────────────
quantities   flour            112.4 kg   counted
             olive oil         18 L      counted
             frying pans        9        counted   (book says 10)
serials      combi oven    #OV-4471      [x] seen
             stand mixer   #MX-0912      [x] seen
             vac sealer    #VS-2130      [ ] not found

The two sections share a sheet, but they rarely want to share a rhythm. Flour is walked monthly because flour moves monthly; a combi oven is bolted to the floor, a delivery van is on the road, and asking anyone to tick either every month is asking for a checkbox nobody reads. So the usual shape is to give the assets their own warehouse — a set of books that carries the fleet and no consumables — and let it close count to count: one walk a year, and the close that follows it. The material warehouses then keep their own cadence, and neither drags the other. Nothing forces this; a small shop with three assets may well leave them on a warehouse's books and tick them with everything else. What makes the split work is that a warehouse's cadence is its own (see Period close §2), so a register never has to be walked on flour's schedule to keep a period closing.

The serial section is pre-drawn from the register — every asset on that warehouse's books, not yet disposed as of the count's date, one row each. That is the walk's expected list, and it exists so the job is short and the question is clear: is what these books claim still here? A disposed unit has left them and an unplaced one never joined them, so neither is drawn and neither is asked after (§3.2).

But on a walk the sheet proposes; it does not permit. The walker may tick any unit the register knows, whether or not it was drawn for them — one the books place in the bar, one on the commissary's books entirely, even one somebody wrote off last month that is plainly still sitting in the corner. Refusing those ticks would mean the one person actually standing in front of the thing is the one person the system will not listen to, and the mistaken sheet becomes the only record. A sighting nobody expected is the most useful thing a walk can produce, and it costs nothing to accept: a tick moves no value, so being surprised is free.

The one thing that cannot be typed onto a count is a serial the register has never heard of. That is not fussiness — an invented serial would put an asset on the books at no cost, and its book value would later leave as a loss on disposal: value born from nothing and written into expense. An asset the books have never heard of enters by being registered, with its cost and its dates. The quantity side answers the same worry differently, because a surplus can simply be observed where it sits: an implement found above its book is recorded, and simply posts no value until the receipt that paid for it is entered (Item model & policies §4).

The opening count is the exception, and the exception runs the other way. It is the document by which a warehouse starts keeping stock, and there the serial section is an assignment: alongside the serials these books already carry, it offers the company's unplaced units, and ticking one means these books take this unit on, from this date. Placing and confirming are different acts wearing the same checkbox, and the opening is the one count that does the first.

Because an opening tick is a claim and not a report, it cannot be generously accepted the way a walk's tick can. A claim this document is unable to honor is refused outright — a unit already on another warehouse's books, which moves here on a transfer and nowhere else, or one already written off, which no gesture but a fresh acquisition can put back on a live balance. Recording such a tick and quietly placing nothing would be the worst of the three answers: the operator would believe they had assigned a unit they had not, and nothing anywhere would say otherwise. An opening draws a register's boundary, so it either draws it or says why it cannot.

Posting the count changes nothing. It freezes the ticks, exactly as it freezes the weights: these serials were seen, on this date, by this walk. It disposes nothing, moves nothing, and re-values nothing. It does not even demand that every box be ticked — an untouched checkbox is simply an unconfirmed serial, and that is a problem for the close to raise, not for the posting to refuse. Splitting the walk from its consequences is the same discipline the quantity side uses: the storekeeper observes, and whoever keeps the books decides what the observation means.

That split is what carries the surprises. A serial ticked where the books do not place it — another storage location, another warehouse's balance, or a unit already written off — lands on the reconciliation view as a discrepancy, next to the quantity gaps (Period close). So does a unit two walks reported from two different storage locations, which is the honest record of two people disagreeing and cannot be settled by either of them. None of it is an error to be refused at the sheet, and none of it moves anything on its own: the discrepancy is answered by the document that moves the unit, posted by whoever answers for the books. A discrepancy that turns out to be right clears itself the moment that document exists.

7.1 The close is where an unconfirmed serial bites¶

When a warehouse closes a period, the close reads the count that qualifies for it and asks one question of the register: is there an asset on these books that this count did not confirm? Every such asset blocks the close, listed alongside the quantity blockers, computed rather than judged (see Period close §7).

There are exactly two ways to resolve it, and both are gestures the system already has:

Found. It was behind the freezer all along. Amend the count, tick the serial, and the blocker melts. The count document is never quietly edited after the fact — the amendment is the honest record that the unit surfaced, and it carries its own date.
Disposed. It is genuinely gone — stolen, scrapped, never returned by the technician. Dispose it (§6), and its remaining book value becomes a loss on disposal in that period.

There is no third answer, and that is the point.

Worked numbers. A vacuum sealer, capitalized €1,200, 60-month life, no salvage, 30 months in. Depreciation taken 30 × €20 = €600; book value €600. The June walk doesn't find it. - Found in July, the count amended: nothing financial happens at all. The sealer keeps its schedule — €20 a month for its remaining 30 months. - Disposed: proceeds €0 − book value €600 = −€600 loss recognized in that period, and the run posts nothing further for it.

Why the model refuses a "missing" limbo. The tempting third option is to flag the unit as missing, leave it on the books, and let it keep depreciating while everyone hopes it turns up. That state is quietly corrosive. Nobody clears it, because clearing it takes a decision and the flag makes the decision optional. Meanwhile the schedule grinds on, so the books carry — for years — value for a unit nobody can point at, and the close, whose entire job is to refuse publishing numbers nobody can defend, waves it through. Forcing the choice at the close is the cure: the close asks, and a human answers found or gone. Either answer is defensible. Silence isn't.

7.2 An asset registered after the walk belongs to the next period¶

Counts are often taken a few days late — the storekeeper was away, and the walk that should have happened on the 30th happens on the 7th. So the close's question is scoped to what the count could honestly have seen: an asset registered after the qualifying count's date does not block that close. It could not have been on the sheet, it was not there to be seen when the walk happened, and it belongs to the next period's truth. This is the same bridging courtesy the quantity side extends to a postponed count.

7.3 Cadence — how often the serials get walked¶

Every warehouse carries a close policy: the rhythm at which its books are meant to be closed — on demand, weekly, monthly, quarterly, or annual. It is a hint, never a gate. It pre-fills the date and tells the operator when a period is due; closing stays a deliberate human act, and any date remains legal (Period close §2).

That single dial is what lets the register be verified on its own rhythm without a separate ritual. Long practice says you walk the flour monthly and the ovens once a year, because consumables churn daily while assets turn over slowly and each unit is individually identified. The model expresses that as topology plus cadence, not as a second kind of check:

main warehouse    monthly cadence   flour, oil, pans        walked every month
asset warehouse   annual cadence    ovens, mixers, fridges  walked once a year

Both are ordinary warehouses with ordinary counts and ordinary closes. The only difference between them is how often each one's truth event comes around — and, since the asset warehouse holds no consumables, its walk is a page of checkboxes and its close is a formality until the day a serial is missing.

A business that would rather tick its four ovens on the same monthly walk as its flour simply keeps them on the same warehouse. That is equally correct, and it costs four checkboxes a month. The choice is the operator's, and it is made by where the assets are registered, not by a setting.

7.4 What a warehouse's books are worth¶

Because assets sit on a warehouse's books, that warehouse's balance is the sum of three things, all as of the same date:

warehouse balance  =  stock pools        (quantity × weighted-average cost)
                   +  implements pool    (quantity × pool average)
                   +  Σ asset book value (capitalized cost − depreciation posted so far)

The asset part is derived, never snapshotted. Book value on any date is the asset's cost minus the depreciation entries posted through that date, and those entries are append-only — so the figure reconstructs itself from the record, exactly the way on-hand reconstructs from movements. Nothing is frozen at a close that a later reader would have to trust blindly.

It is also a sum over what these books carry, and nothing more. A unit the company owns but has placed nowhere sits in no warehouse's balance at all; its book value is the company's own figure, reported at the company level. So adding up every warehouse's balance need not account for every unit in the register — the difference is the assets nobody has taken on yet, plus, when the window being read ended before some unit was taken on, that unit as well: a warehouse's balance claims an asset only for the months its books were actually answering for it. Nothing owned goes unreported either way, and reading the gap as a reconciliation error is the one mistake to avoid here.

Worked example. The asset warehouse carries three units at the end of June: the combi oven (cost €4,500, €1,600 depreciated → €2,900), a stand mixer (cost €800, €480 depreciated → €320), and a fridge (cost €2,200, €2,200 depreciated → €0, fully written down but still in service). It holds no consumables at all, so its balance is €3,220 — entirely asset book value. The main warehouse's balance that same day is flour, oil and pans, and not one cent from the register.

8. Moving an asset between books is a document, not an edit¶

Assets move. The mixer goes from the commissary to the new site; the tablet follows a manager across town. When one moves between two warehouses' books, that is not a field to correct — it is a transfer, the same dated document that moves flour between warehouses, carrying asset lines alongside its quantity lines or instead of them.

Why insist on a document? Because two sets of books change hands at once. Both warehouses have periods, both take counts, both close. An undated edit could slide an asset out of a warehouse that had already closed a period in which the walk confirmed it — and afterward nobody could say on what date the books changed, or which warehouse's count should have covered the unit. The transfer answers all of that by construction: it has a date, and that date must fall in the open period of both warehouses, exactly as it must when the cargo is flour. A transfer still sitting in draft with a date inside a period blocks that period's close on both sides, so a half-finished move can never be closed over.

What a transfer of assets does and doesn't do:

One asset per line. Assets are identified units, so there is no quantity to write — the line names the unit, and that is the whole line.
A document may mix. Twenty kilos of dough and one stand mixer can ride the same transfer. So can nothing but assets: an asset-only transfer is perfectly ordinary, and it is exactly the document that seeds a new asset warehouse.
Posting moves the books, not stock. The asset's warehouse becomes the receiving one as of the document's date. No stock movement is posted, and there is no transit leg — a transfer of flour models the van because a pool genuinely empties before the other fills, but an asset is a single register row that is simply now the other warehouse's responsibility.
A line may say where the unit lands. Name a storage location in the receiving warehouse and the unit arrives somewhere rather than merely arriving; say nothing and it lands on the books without a custody point, to be settled later where custody is edited. Naming one is the kinder answer, because a unit that arrives nowhere is a unit somebody has to remember to finish placing.
Both ends may be the same warehouse. Then no books change hands and no value moves, and the document exists for one reason: to put on the record that the unit physically moved. Such a line must say where the unit landed — that is the whole of what it asserts — and undoing the document puts the unit back where it started.
Cancelling flips it back. The document is the record, so undoing the document undoes the move. A unit that has moved on since — to other books, or to another storage location within these — is not written over: the undo refuses, and says so, rather than quietly contradicting a later move.
Two guards. The asset must actually be on the sending warehouse's books, and it must not be disposed. Both catch the same class of mistake: a document describing a move that could not have happened. A unit no books carry yet is not transferred onto them — it is placed (§3.2); a transfer's whole subject is books changing hands.
It is also how a misplacement is corrected. A unit placed on the wrong books is never un-placed; it is transferred to the books that should have had it, on a date both periods can accept, and the record says plainly what happened.

Worked example. The company opens a second site and moves the stand mixer (capitalized €800, €480 depreciated, book value €320) from the commissary to the new site's warehouse, on 12 May. One transfer, one asset line naming the prep bench, dated 12 May, both periods open. After posting: the commissary's balance drops by €320 and the new warehouse's rises by the same €320 — nothing is created or destroyed, and the mixer stands on the prep bench rather than waiting to be placed. Depreciation never notices: the same €16.00 slice posts every month, before and after, because the calendar owns the money and the document only owns the books it sits on. From June onward the mixer appears on the new warehouse's walk and no longer on the commissary's.

9. End to end — the life of one oven¶

Tying it together with a single asset, from purchase to sale:

Acquire and place into service (Jan 1). The business orders a combi oven on a purchase order and receives it on a goods receipt: €4,000 sticker + €300 delivery
€200 install = €4,500 capitalized cost. The line points at the asset warehouse — the same delivery's flour lines point at the dry store — so posting the capitalized line creates the register entry (asset code, serial) on the asset warehouse's books, with the useful life defaulting to 60 months and €500 salvage value entered by the operator. At first the oven is only acquired — capitalized but idle, not yet depreciating. It is installed and switched on the same day, so it is placed into service on Jan 1, and that is when its depreciation clock starts. (Had it sat crated until March, the clock would have started in March instead — the cost is spread from the day it begins earning, not the day it arrived.) The €4,500 invoice is matched against the order like any other purchase. No stock movement is posted.
Depreciate (every month-end). The monthly depreciation run catches up from the in-service date, posting €66.67/month (= Round((€4,500 − €500) ÷ 60, 2)) on the calendar's own clock, owing nothing to any warehouse's count. After 24 months: depreciation taken €1,600.08, book value €2,899.92.
Get walked (each time the asset warehouse counts). The asset warehouse's cadence is annual, so once a year someone walks it and ticks the oven's serial on the count. The close then publishes the period with the oven's book value inside the warehouse's balance. (Had the walk not found it, the close would have refused until someone answered found or gone — and gone would have booked its then-€2,900 book value as a loss on disposal.)
Dispose (month 24, sold for €3,000). Depreciation is brought current and stopped; the asset's cost and accumulated depreciation leave the register; the disposal recognizes proceeds €3,000 − book value €2,900 = +€100 gain. The asset's status is now disposed, and it drops off the asset warehouse's next walk. At no point did it touch on-hand, a quantity, a weighted-average pool, or "stock leaving the warehouse."

Now contrast a sack of flour over the very same window: received → on-hand at a blended average cost → consumed into cost of goods sold as dough is made → counted monthly at its warehouse → any shrinkage re-spread at the close. Two kinds of value, two ledgers, two clocks — even though both arrived on a goods receipt, and even though a single walk can confirm both. That separation is what this chapter is about.