In brief: Fixed assets are durable goods intended to serve the company’s activity on a long-term basis. The CGNC and the Plan Comptable Général des Entreprises (PCGE) govern their accounting at every stage: initial measurement at acquisition cost or production cost, depreciation according to the chosen schedule, impairment testing by comparing NBV with current value, and derecognition upon disposal or scrapping. The fixed asset register and the annual physical inventory are mandatory.
Classification of Fixed Assets Under the PCGE
The PCGE classifies fixed assets into three major categories, each corresponding to a specific heading in class 2.
Intangible Assets (Class 21)
Intangible assets are identifiable non-monetary assets without physical substance. They include notably:
| PCGE account | Description | Examples |
|---|---|---|
| 2111 | Incorporation and capital increase costs | Notarial fees, registration duties |
| 2112 | Patents, trademarks, rights and similar | Industrial patents, licences, trademarks |
| 2113 | Goodwill | Customer base, leasehold rights, trade name |
| 2120 | Research and development assets | Capitalised R&D costs |
| 2128 | Other intangible assets | Acquired software |
Tangible Assets (Class 23)
Tangible assets generally constitute the largest portion of non-current assets. They comprise the physical goods used in operations.
| PCGE account | Description |
|---|---|
| 2311 | Bare land |
| 2312 | Developed land |
| 2321 | Buildings |
| 2331 | Technical installations |
| 2332 | Machinery and equipment |
| 2340 | Vehicles |
| 2351 | Office furniture |
| 2352 | Office equipment |
| 2355 | IT equipment |
Financial Assets (Classes 24/25)
Financial assets include equity investments (account 2510), long-term loans (account 2481), deposits and guarantees paid (account 2486) and other financial receivables. Their accounting treatment follows specific rules distinct from tangible and intangible assets.
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Initial Measurement
Initial measurement is a key moment in the accounting for fixed assets. The CGNC adopts historical cost as the valuation basis, according to three modes of acquisition.
Acquisition for Consideration
Acquisition cost includes:
- The purchase price net of trade discounts and rebates
- Customs duties and non-recoverable taxes
- Directly attributable ancillary costs: transport, installation, assembly, commissioning
- Acquisition costs: fees, commissions, deed costs (option to capitalise or expense)
Example: a company acquires an industrial machine for 500,000 MAD (VAT excluded). Transport costs amount to 15,000 MAD and installation costs to 25,000 MAD. The cost of entry is 500,000 + 15,000 + 25,000 = 540,000 MAD.
| Account | Description | Debit | Credit |
|---|---|---|---|
| 2332 | Machinery and equipment | 540,000 | |
| 34552 | Government — Recoverable VAT on fixed assets | 108,000 | |
| 4481 | Payables on acquisition of fixed assets | 648,000 |
Self-Constructed Assets
When a company produces a fixed asset for its own use, the production cost includes:
- The cost of raw materials consumed
- Direct labour costs
- Indirect production costs reasonably attributable
Borrowing costs are included in the production cost only if they relate to the production period and that period is significantly long (more than 12 months in common practice).
The capitalisation entry is posted through the credit of account 7142 — Tangible assets produced (or 7141 for intangible assets).
Acquisition by Contribution in Kind
When a fixed asset is received as a contribution in kind, it is valued at the value agreed in the contribution deed, validated by the contributions auditor (commissaire aux apports). This value constitutes the cost of entry into the company’s assets.
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Assets Under Construction
Assets under construction or production are recorded in specific accounts ending in 9 within class 23 (example: 2393 — Tangible assets under construction).
These accounts record expenditure incurred for fixed assets that are not yet completed or commissioned. They are subject to no depreciation until they are commissioned.
Commissioning
When an asset under construction is completed and commissioned, it is transferred from the “under construction” account to the definitive fixed asset account.
| Account | Description | Debit | Credit |
|---|---|---|---|
| 2321 | Buildings | Total cost | |
| 2393 | Tangible assets under construction | Total cost |
The commissioning date constitutes the starting point for depreciation calculations.
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Depreciation of Fixed Assets
Depreciation reflects the consumption of economic benefits associated with the use of the fixed asset. It is calculated according to a depreciation schedule defined when the asset is commissioned.
The detailed treatment of accounting depreciation in Morocco is covered in a dedicated article. Tax aspects (permitted rates, declining balance depreciation, vehicle ceiling) are discussed in our guide on tax depreciation.
Key Points to Remember
- Depreciation begins from the date of commissioning (not acquisition)
- Calculations are pro rata temporis for the years of acquisition and disposal
- Land is not depreciable (except quarries and mineral deposits)
- The straight-line method is the default in Morocco
- Depreciation charges are posted to account 6193 (depreciation charges for tangible assets) with a credit to account 283x (accumulated depreciation of tangible assets)
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Impairment Testing
Beyond systematic depreciation, the CGNC requires an impairment test when there are indications of a loss in value. This test consists of comparing the net book value (NBV) of the asset with its current value.
Current Value
Current value is the higher of:
- Fair value: the price that could be obtained from selling the asset under normal market conditions
- Value in use: the value of future economic benefits expected from the use of the asset
Recognising Impairment
If the current value is lower than the NBV, an impairment provision must be recognised for the difference.
| Account | Description | Debit | Credit |
|---|---|---|---|
| 6194 | Impairment charges for fixed assets | Amount | |
| 2920 | Provisions for impairment of tangible assets | Amount |
If the current value subsequently recovers, the provision is reversed to the extent it is no longer justified, without the NBV after reversal exceeding the NBV that would have been obtained in the absence of impairment (i.e. after normal depreciation).
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Disposal of a Fixed Asset
The disposal of a fixed asset results in its derecognition from assets and the recognition of a disposal result (gain or loss).
Disposal Entries
The accounting treatment is broken down into three steps:
1. Additional depreciation up to the date of disposal (pro rata temporis).
2. Derecognition of the asset and recognition of the NBV as an expense.
| Account | Description | Debit | Credit |
|---|---|---|---|
| 28xx | Accumulated depreciation | Cumulative | |
| 6513 | NBV of tangible assets disposed of | NBV | |
| 23xx | Tangible assets | Gross value |
3. Recognition of the disposal price as income.
| Account | Description | Debit | Credit |
|---|---|---|---|
| 3481 | Receivables on disposal of fixed assets (or 5141 Bank) | Disposal price incl. VAT | |
| 7513 | Income from disposal of tangible assets | Disposal price excl. VAT | |
| 4455 | Government — VAT charged | VAT |
Worked Example
A company disposes on 1 July of year N of a vehicle acquired on 1 January of year N-3 for 300,000 MAD (VAT excluded), depreciated on a straight-line basis over 5 years (rate 20%). Disposal price: 100,000 MAD (VAT excluded).
- Annual depreciation: 300,000 × 20% = 60,000 MAD
- Accumulated depreciation at 31/12/N-1: 60,000 × 3 = 180,000 MAD
- Additional depreciation year N (6 months): 60,000 × 6/12 = 30,000 MAD
- Total depreciation: 180,000 + 30,000 = 210,000 MAD
- NBV: 300,000 − 210,000 = 90,000 MAD
- Disposal result: 100,000 − 90,000 = +10,000 MAD (gain)
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Scrapping
Scrapping occurs when a fixed asset is removed from assets without financial consideration (asset out of use, obsolete, destroyed). The treatment is similar to disposal, except that the disposal price is nil. The residual NBV constitutes an exceptional expense.
If the asset is fully depreciated, scrapping results in a simple derecognition entry with no impact on the result:
| Account | Description | Debit | Credit |
|---|---|---|---|
| 28xx | Accumulated depreciation | Gross value | |
| 23xx | Tangible assets | Gross value |
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Fixed Asset Register and Physical Inventory
Fixed Asset Register
Every company must maintain a fixed asset register listing all non-current assets. The register records for each asset: description, date of acquisition, cost of entry, depreciation method and rate, cumulative depreciation, NBV, and where applicable the date and conditions of disposal.
This register is an essential management tool and a supporting document in the event of a tax audit or auditor’s review.
Annual Physical Inventory
The year-end physical inventory must cover not only inventories but also fixed assets. This inventory aims to:
- Verify the physical existence of each asset recorded in the register
- Identify assets that have been lost, destroyed or scrapped but not yet derecognised
- Reconcile the fixed asset register with the accounts and correct any discrepancies
- Identify indications of impairment justifying a value test
A rigorous physical inventory directly contributes to the reliability of the accounts and the quality of the financial statements.
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FAQ — Fixed Assets Accounting in Morocco
What is the capitalisation threshold in Morocco?
The CGNC does not set a formal monetary threshold below which an asset would systematically be expensed. The determining criterion is the intended use of the asset: if it is intended to serve the business on a lasting basis (more than one fiscal year), it must be capitalised. In practice, many companies set an internal threshold (often between 500 and 1,000 MAD, VAT excluded) below which low-value items are expensed directly. This threshold must be applied consistently.
Must acquisition costs be capitalised or expensed?
The CGNC offers an option: acquisition costs (fees, commissions, deed costs) may either be included in the acquisition cost of the fixed asset or expensed in the period. The chosen approach constitutes an accounting policy that must be applied consistently and disclosed in the ETIC.
How is a leased asset (crédit-bail) accounted for?
Under the CGNC, leasing (crédit-bail) is treated as a rental transaction. Lease payments are expensed (account 6132). The asset does not appear on the lessee’s balance sheet. When the purchase option is exercised, the asset is capitalised at the residual price. Under IFRS (IFRS 16), the treatment is different: the lessee recognises a right-of-use asset and a lease liability.
Can fixed assets be revalued in Morocco?
Free revaluation of fixed assets is possible under the CGNC but is rarely practised. The revaluation surplus is recorded in equity (account 1130 — Revaluation surplus). Caution: revaluation has significant tax consequences, as the unrealised gain may be taxable. Legal revaluations have been provided for by certain past finance acts with a specific tax regime.
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