- 3
- April
In EP.1, we learned what fixed assets are, how they are categorized, and how many types exist. In EP.2, we dive deeper into the topics that confuse procurement and accounting officers the most — how do sub-threshold fixed assets differ from supplies? How do you calculate depreciation? Plus 2 real-world cases commonly encountered in Thai government agencies: set-based assets (computer sets) and lump-sum conference room renovation contracts.
In short: Thai government agencies use the Straight-line Method for depreciation = (Ready-to-use Cost - 1 THB) ÷ Useful Life — where "Ready-to-use Cost" must include shipping, installation, and all wiring costs allocated to each individual asset.
Sub-threshold Fixed Assets — Why Are They Not Supplies?
From EP.1, we know that fixed assets must be valued at 5,000 THB or more. However, government agencies have many items that are durable and last for years, yet cost less than 5,000 THB — these items are not supplies but rather "sub-threshold fixed assets".
| Example | Price | Nature | Classification |
|---|---|---|---|
| Desk fan | 1,500 THB | Durable, lasts for years | Sub-threshold Fixed Asset |
| Calculator | 1,200 THB | Durable, lasts for years | Sub-threshold Fixed Asset |
| Office chair | 3,500 THB | Durable, lasts for years | Sub-threshold Fixed Asset |
| Printer ink (2,800 THB) | 2,800 THB | Consumable, used up | Supply |
| A4 paper (5 reams) | 750 THB | Consumable, used up | Supply |
Key principle: Always check the "nature" before the "price" — if an item is consumable and gets used up, it is always a supply regardless of price. If it is durable but costs less than 5,000 THB, it is a sub-threshold fixed asset, which must be recorded in a control ledger and physically counted — it cannot be treated the same as a supply.
What Must Be Done for Sub-threshold Fixed Assets?
| Action | Fixed Asset (above threshold) | Sub-threshold Fixed Asset | Supply |
|---|---|---|---|
| Accounting | Asset account (on the balance sheet) | Supply account (control ledger) | Expense (written off immediately) |
| Depreciation | Must be calculated annually | Not required | Not required |
| Control | Full registration + asset code assigned | Control ledger + asset code assigned | No code required |
| Physical Count | Annual (mandatory) | As appropriate | Inventory only |
| Disposal | Per regulations (sell/donate/destroy) | Per regulations (simpler process) | Not required |
Depreciation — The Straight-line Method
Thai government agencies are required to calculate depreciation using the Straight-line Method, which is the simplest approach:
Formula:
Annual Depreciation = (Ready-to-use Cost - Residual Value) ÷ Useful Life
The Residual Value for Thai government assets = 1 THB (this token amount is retained so the asset remains visible in the registry even after it is fully depreciated).
What Is Ready-to-use Cost?
Ready-to-use Cost is not just the purchase price of the asset — it must include all expenses incurred to make that specific asset operational:
- Purchase price (the asset itself)
- Shipping costs
- Installation costs
- Wiring/piping costs
- Testing/calibration costs
All of these costs must be allocated to each individual asset rather than recorded as separate line items, because this is the value used for depreciation and registration purposes.
Depreciation Calculation Example
Example 1: Air Conditioner
- Purchase price: 35,000 THB
- Installation + piping: 5,000 THB
- Ready-to-use Cost: 40,000 THB
- Useful life: 8 years (Electrical & Radio Equipment category)
- Annual depreciation = (40,000 - 1) ÷ 8 = 4,999.88 THB/year
| Year | Accumulated Depreciation | Book Value |
|---|---|---|
| 0 (Date acquired) | 0 | 40,000.00 |
| 1 | 4,999.88 | 35,000.12 |
| 2 | 9,999.76 | 30,000.24 |
| ... | ... | ... |
| 8 | 39,999.00 | 1.00 (Residual Value) |
After 8 years, the book value is reduced to 1 THB — indicating that the asset is still in the registry but fully depreciated. The agency must then decide whether to continue using it (no further depreciation) or dispose of it (sell/donate/destroy).
Real Case 1: Set-based Assets — Computer Sets
Many government agencies purchase computers as "sets" — comprising multiple components that cannot function independently (a CPU cannot work without a monitor). In this case, each component gets its own code, but depreciation is calculated for the entire set.
| Item | Asset Code | Price (THB) |
|---|---|---|
| Desktop Computer (CPU) | 7440-001-0012/1 | 18,000 |
| Monitor | 7440-001-0012/2 | 5,500 |
| Keyboard + Mouse | 7440-001-0012/3 | 800 |
| UPS (Uninterruptible Power Supply) | 7440-001-0012/4 | 2,500 |
| Total set | 7440-001-0012 | 26,800 |
Depreciation calculation: Use the total set value of 26,800 THB ÷ useful life of 5 years
Annual depreciation = (26,800 - 1) ÷ 5 = 5,359.80 THB/year
Why Separate Codes but Combined Depreciation?
- Separate codes — enables individual physical counting; if the monitor breaks, you can identify exactly which component it is; components can be transferred to other sets
- Combined depreciation — because the components cannot function independently (a CPU without a monitor cannot work), they are treated as a single operational unit
Common Problems with Set-based Assets
| Problem | Impact |
|---|---|
| Replacing the monitor without adjusting the set value | Depreciation is wrong, fails audit |
| Keyboard lost but depreciation still calculated on the full set | Book value does not match physical reality |
| Recording each component separately with individual depreciation | Violates regulations — an 800 THB keyboard would become a "supply" even though it is part of a set |
| Transferring a component to another set | Must remove from the original set and adjust values for both sets |
Real Case 2: Lump-sum Conference Room Renovation
This is a classic case frequently encountered in Thai government agencies, especially with older renovation contracts that did not require the vendor to itemize individual asset values.
Scenario: A Single Lump-sum Invoice
An agency contracted a conference room renovation for 500,000 THB, receiving an entire room of equipment, but the invoice simply states:
"Conference room renovation, 3rd floor, with installation — 500,000 THB"
| Equipment in the Room | Code | Value? |
|---|---|---|
| Projector | 7430-xxx/1 | Unknown |
| Projection screen | 7430-xxx/2 | Unknown |
| Audio system (mixer + speakers + microphones) | 7430-xxx/3 | Unknown |
| Air conditioners ×2 | 4120-xxx/4-5 | Unknown |
| Conference table + 20 chairs | 7110-xxx/6 | Unknown |
| Total | 500,000 | |
Impact: Long-term Problems
- Can only register a single "conference room set" — cannot separate individual assets
- Projector breaks — cannot determine repair budget because the original value is unknown
- Air conditioners reach end of life — cannot dispose of just the air conditioners because they are tied to the lump-sum total
- Physical count — 3 chairs go missing but the value cannot be deducted
- Depreciation — each asset category has different useful lives (air conditioners: 8 years, projectors: 5 years, furniture: 15 years), but everything must be depreciated as one lump sum
The Correct Approach: Itemize Ready-to-use Cost Per Unit
Current best practice is to require vendors to itemize individual asset values, including shipping, installation, and wiring costs from the procurement stage (specified in the Terms of Reference / contract).
| Item | Equipment Price (THB) | Shipping + Installation + Wiring (THB) | Ready-to-use Cost (THB) |
|---|---|---|---|
| Projector (with ceiling mount + HDMI wiring) | 45,000 | 8,000 | 53,000 |
| 120-inch projection screen (with wall mounting) | 15,000 | 3,000 | 18,000 |
| Audio system (with wiring + speaker mounting) | 85,000 | 18,000 | 103,000 |
| Air conditioners ×2 (with installation + piping) | 70,000 | 16,000 | 86,000 |
| Conference table + 20 chairs (with arrangement) | 120,000 | 5,000 | 125,000 |
| Total | 385,000 | ||
Note: There is no separate "wiring + decoration" line item
All wiring costs have been allocated to each individual asset, because Ready-to-use Cost = equipment price + all costs needed to make that specific item operational. This is the correct principle for registration and depreciation processing.
Recommended Terms of Reference / Contract Language
Sample clause: "The vendor must provide itemized values for each piece of equipment, including shipping, installation, and all costs necessary to make each asset operational, for asset registration and depreciation calculation purposes."
Why Is This Approach Important?
| Benefit | Details |
|---|---|
| Accurate depreciation | The projector is valued at 53,000 THB (not 45,000), because the ceiling mount and wiring are part of its cost |
| Correct disposal | If the projector breaks, the 53,000 THB can be removed from the books immediately |
| Accurate repair budgeting | Knowing each item's original value enables reasonable repair budget requests |
| Passes audit | The State Audit Office of Thailand can see the clear origin of each asset's value |
| Category-specific depreciation | Air conditioners at 8 years, projectors at 5 years, furniture at 15 years — each according to its actual category |
Useful Life by Asset Category
The Comptroller General's Department prescribes standard useful lives for depreciation calculation by category. Procurement officers must apply these correctly:
| Asset Category | Useful Life (years) | Annual Depreciation (example: 100,000 THB asset) |
|---|---|---|
| Computer Equipment | 5 | 19,999.80 |
| Advertising & Media Equipment | 5 | 19,999.80 |
| Office Equipment | 5-15 | 6,666.60 - 19,999.80 |
| Electrical & Radio Equipment | 5-8 | 12,499.88 - 19,999.80 |
| Vehicles & Transportation | 8-12 | 8,333.25 - 12,499.88 |
| Industrial/Factory Equipment | 8-15 | 6,666.60 - 12,499.88 |
| Permanent Buildings | 20-40 | 2,500.00 - 5,000.00 |
How Does Saeree ERP Handle Depreciation and Set-based Assets?
The fixed asset management module in Saeree ERP supports all the scenarios discussed above:
| Challenge | How Saeree ERP Handles It |
|---|---|
| Set-based assets | Automatic Parent-Child code linking — separate codes per component, combined depreciation per set |
| Ready-to-use cost allocation | Records purchase price + installation + wiring and automatically combines them into the ready-to-use cost |
| Depreciation | Automatic calculation based on each category's useful life — no manual computation needed |
| Component replacement/transfer | Transfer components between sets with automatic value adjustment for both sets |
| Sub-threshold fixed assets | Separate control ledger — no depreciation, but status tracking is maintained |
| Reporting | Generate reports for accumulated depreciation, end-of-life assets, and all sub-threshold assets |
Read more about the goods receipt system and warehouse management that integrate with the fixed asset module in our related articles.
Depreciation that is wrong from day one will remain wrong throughout the asset's entire useful life — retroactive corrections are difficult, audits fail, and financial statements lose credibility. Recording the correct ready-to-use cost at the procurement stage is the most important starting point.
- Sureeraya Limpaibul, Saeree ERP
Summary
| Topic | Summary |
|---|---|
| Sub-threshold fixed assets | Durable but < 5,000 THB; no depreciation required, but must be recorded in a control ledger |
| Depreciation method | Straight-line: (Ready-to-use Cost - 1) ÷ Useful Life |
| Ready-to-use cost | Purchase price + shipping + installation + wiring (allocated to each individual asset) |
| Set-based assets | Separate codes per component, combined depreciation per set |
| Lump-sum contracts | Must require itemized ready-to-use cost per unit in the Terms of Reference from the procurement stage |
EP.3: Fixed Asset Lifecycle Management — From Procurement to Disposal — covers the complete asset lifecycle: procurement → registration → usage → physical count → disposal, along with common problems.
If your agency is looking for a fixed asset management system that automatically calculates depreciation and supports set-based assets, you can schedule a demo or contact our consulting team to assess your organization's readiness.
