Swiss GAAP FER 18 is the Swiss accounting standard for tangible fixed assets. It covers how businesses recognise, value, depreciate and disclose physical assets such as buildings, machinery and equipment.
For a Swiss business, these decisions affect both the balance sheet and reported profit. Should a machinery upgrade become an asset or an expense? How long should equipment be depreciated? This guide explains the main principles, with practical examples to help you prepare clearer financial records.
What Is Swiss GAAP FER 18?
Assets Covered by the Standard
Tangible fixed assets are physical assets held for production, service delivery or investment. Examples include factory machinery, company vehicles, office furniture and buildings.
The asset’s purpose matters. A vehicle used for deliveries is a fixed asset; a vehicle held by a dealer for sale is inventory. Software generally falls under intangible asset rules.
The official Swiss GAAP FER 18 guidance explains the standard’s scope, valuation principles, and requirement for a statement of changes in tangible fixed assets.
Its Place in Swiss Financial Reporting
FER 18 forms part of the further Swiss GAAP FER standards, outside Core FER. Whether it applies depends on the reporting framework your organisation uses.
Swiss GAAP FER reporting also differs from statutory accounting under the Swiss Code of Obligations. Before reviewing individual assets, establish which framework your accounts must follow. This avoids applying rules from different frameworks without checking whether they are compatible.
Which Costs Can Be Capitalised Under FER 18?
Capitalisation means recording qualifying expenditure as an asset rather than charging the full amount immediately as an expense. The decision depends on what the spending creates.
Purchase and Production Costs
Recognition depends on expected future economic benefits and reliable measurement of cost. For purchased equipment, assess the purchase price and directly attributable costs needed to prepare it for use. For self-built assets, reliable project cost records are essential.
Consider this illustrative machinery purchase:
Cost
Amount
Purchase price
CHF 110,000
Delivery
CHF 3,000
Necessary installation
CHF 7,000
Total qualifying cost
CHF 120,000
Purchase price
AmountCHF 110,000
Delivery
AmountCHF 3,000
Necessary installation
AmountCHF 7,000
Total qualifying cost
AmountCHF 120,000
Purchase and production costs
Assuming all three costs qualify, the asset starts at CHF 120,000. Keep the invoices and a short explanation of the installation work together so the calculation can be checked later.
Repairs and Asset Improvements
Routine servicing normally belongs in expenses. An upgrade that increases capacity or extends useful life may qualify for capitalisation.
For example, replacing worn seals keeps a machine working. Adding a new production module may create additional benefits. Ask the operations team what changed, and record the answer alongside the invoice. The invoice amount alone does not settle the accounting treatment.
How Does Depreciation Work Under Swiss GAAP FER 18?
Depreciation allocates an asset’s depreciable amount over its expected useful life. It reflects consumption of the asset’s benefits, rather than movements in its resale price.
Useful Life and Depreciation Method
Useful life should reflect expected use, wear and technical obsolescence. Depreciation begins when the asset is available for its intended use.
Straight-line depreciation spreads the charge evenly. Other methods may better reflect how benefits are consumed. Review estimates as circumstances change, and do not automatically use tax depreciation rates for FER reporting.
A Simple Depreciation Example in CHF
Assume the machine above is available for use throughout the year:
After one full year, its carrying amount is CHF 100,000, assuming no impairment or other adjustments.
The five-year life is illustrative. A machine operating continuously may need a different estimate from one used occasionally. Discuss expected use with the people who manage the equipment before setting the schedule.
Impairment and Investment Property Valuation
Normal depreciation is only part of subsequent measurement. Unexpected losses in the value of investment assets require separate attention.
Impairment Reviews Under FER 20
Damage, obsolete technology, or weaker demand may suggest that an asset’s recorded value is no longer recoverable. Swiss GAAP FER 18 refers to FER 20 for impairment reviews.
When indicators exist, compare the carrying amount with the recoverable amount: the higher of the net selling price and value in use. Value in use reflects discounted future cash flows.
Suppose a machine has a carrying amount of CHF 100,000 and a recoverable amount of CHF 75,000. The impairment loss is CHF 25,000. A fall in sales alone does not establish that loss; the recoverability assessment does. The Foundation explains this approach in its FER 20 impairment guidance.
Assets Held Exclusively for Investment
Operating assets follow a cost-based approach, less accumulated depreciation and impairment. Assets held exclusively for investment may use actual value or depreciated cost.
First establish the property’s purpose. A building occupied by your business and one held exclusively for rental investment require different considerations. Document the classification before choosing the valuation treatment.
Fixed Asset Disclosures and Year-End Checks
The Fixed Asset Movement Schedule
The statement of changes in tangible fixed assets explains how balances moved during the year. It brings together items such as additions, disposals, depreciation, and impairment.
For management, it also offers a useful check: do the movements match the investments and disposals the business actually made?
Supporting Records for Reliable Reporting
Before closing the accounts:
Reconcile the asset register with the general ledger.
Check purchase costs and dates assets became available for use.
Record sales, scrapping and other disposals.
Review useful lives and potential impairment indicators.
The following examples show where accounting questions can arise:
Industry
Typical decision
Practical focus
Manufacturing
Upgrade a production line
Separate servicing from improvements
Hospitality
Refurbish rooms and equipment
Identify assets and their expected lives
Real estate
Hold a building for use or investment
Document its purpose before valuation
Manufacturing
Typical decisionUpgrade a production line
Practical focusSeparate servicing from improvements
Hospitality
Typical decisionRefurbish rooms and equipment
Practical focusIdentify assets and their expected lives
Real estate
Typical decisionHold a building for use or investment
Practical focusDocument its purpose before valuation
Practical applications in some Swiss industries
For a hotel refurbishment, request an itemised invoice separating furniture, equipment and building work. A single “renovation” total makes later review harder.
For a manufacturer, connect the asset register with maintenance records. This helps finance teams identify equipment that has been replaced, damaged or taken out of service. These habits improve the evidence behind the accounts.
FAQ
There is no universal CHF threshold for every business. A company policy should reflect materiality and be applied consistently, including consideration of purchases that are significant in aggregate.
Conclusion
Clear asset records make reporting decisions easier to explain and review. Fiduciaire Genevoise provides accounting services and audit and control services in Geneva, including work involving Swiss GAAP reporting.
Whether you are reviewing equipment purchases or preparing annual accounts, start with your asset register and the questions that remain unresolved.
Get Fixed Asset Accounting Support in Geneva
Discuss your Swiss GAAP FER 18 accounting needs with Fiduciaire Genevoise and prepare your next year-end with clearer records.
