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Difficulty: EasyAdjustments for Depreciation of Fixed Assets

Complete the statement below regarding the presentation of fixed assets in the Balance Sheet of a sole trader.

Answer:In the Balance Sheet, a fixed asset is shown at its net book value, which is calculated by deducting the 【accumulated】 depreciation from its original cost.

Answer

The net book value of a fixed asset in the Balance Sheet is calculated by deducting accumulated depreciation (or provision for depreciation) from its cost.
In the Balance Sheet, fixed assets are stated at Net Book Value (NBV), which equals historical cost minus accumulated depreciation.

Step-by-Step Solution

1
Recall the accounting relationship for presentation of fixed assets in the Balance Sheet.
Net Book Value = Cost - Accumulated Depreciation.
Fixed assets are carried in the Balance Sheet at historical cost less total cumulative depreciation charged to date.

Key Concept

Presentation of Net Book Value of Fixed Assets in Final Accounts
Estimated Time:45s
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Topics

Adjustments for Depreciation of Fixed Assets

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