Põhivara

Põhivara is an Estonian term that translates to "fixed assets" or "property, plant, and equipment" in English accounting contexts. It refers to tangible assets that a company owns and uses in its operations for more than one accounting period. These assets are not intended for sale in the ordinary course of business.

Common examples of põhivara include land, buildings, machinery, vehicles, furniture, and computer equipment. The primary characteristic of põhivara is its long-term nature and its role in generating revenue for the business.

Companies are required to record põhivara on their balance sheets at its historical cost. This cost includes the purchase price and any directly attributable costs incurred to bring the asset to its intended use, such as transportation and installation costs. Over time, põhivara is subject to depreciation, which is the systematic allocation of its cost over its useful life. This depreciation expense is recognized in the company's income statement.

Proper management and accounting for põhivara are crucial for accurate financial reporting. It helps in understanding a company's investment in its productive capacity, calculating profitability, and making informed decisions about asset replacement and capital expenditures. The specific accounting standards and regulations governing põhivara in Estonia are based on International Financial Reporting Standards (IFRS).