The assets of the company, or rather, their combined value, are necessary resources that ensure the production of new products, the ability to expand markets and modernize existing capacities, search for new partners and customers, that is, the financial and economic side of the life of the company.
Learn more about this economic indicator, its book value and role in the life support of the company will help this publication.
Fixed assets
All property of the organization is divided into non-current and current assets. The former include funds that are not involved in the production process, but which ensure the creation of a product or the provision of services. It:
• fixed assets - workshops, buildings, structures, that is, premises adapted for production, as well as equipment, machine tools, installations and machines that support the process itself;
• intangible assets, that is, property that does not have a tangible form, but is able to significantly increase the image of the company and create a successful reputation for it (relevant computer programs, licenses, brands, trademarks, and much more).
All the listed assets are combined in the 1st section of the balance sheet, and their value is indicated in line 1100. Note that fixed assets and intangible assets in the balance sheet are always taken into account at their residual value (that is, the initial amount reduced by the amount of depreciation). Depreciation is recorded in the accounting registers of the company, and in the balance sheet this amount cannot be seen.
Current assets
This category of company property is directly involved in the production process and is:
• stocks, materials and raw materials from which goods for sale are produced;
• cash (in accounts and on hand) and their equivalents;
• accounts receivable, that is, debts of buyers and customers for goods exported but not yet paid, or company payments as advance payment for the purchase of goods or services.
The listed groups of property form the second section of the balance sheet, occupying line 1200 - “Current assets”.
Asset accounting
The total value of the property of these sections form the asset balance - its left side, and indicate the presence of property in the company. It is necessary to take into account its value, since this absolute indicator is involved in many of the most analytical calculations. The property of the company is accumulated in the balance sheet, divided by purpose:
▪ in the first section (p. 1100) - non-current assets;
▪ in the second (p. 1200) - negotiable.
When these lines are combined, the carrying amount of the assets is created. This is a balance line of 1600, and it is calculated using the following formula:
Page 1600 = p. 1100 + p. 1200
How to fill in the balance
The accountant, distributing the amounts corresponding to the balances on the accounts of fixed assets, intangible assets, stocks, finances and debt of debtors, fills in the right, i.e., the active side of the balance sheet. 1600 line of the balance sheet shows the total value expression of all property available in the company at a certain reporting date.
Note that the right side of the balance sheet is made up of the sources of these assets - funds, reserves, profits, loans and borrowed funds. The total balance values of the right and left sides are always the same, since the amount of assets cannot differ from its own sources.
Where is the indicator used
Due to the versatility of the balance sheet form, it is very easy to calculate the summed values of all types of property by adding the line values. This is the carrying amount of the assets. Where to look at this value is already known: p. 1600 indicates the availability of property on a certain date.
Economists rely on this indicator to determine different ratios, for example, calculating production profitability or asset turnover.
The obligation to calculate the value of property on the balance sheet is legally established to ensure large transactions for the sale of assets. To establish the size of the transaction, the book value of assets (this is the line of balance sheet 1600) is compared with the value of property sold under the contract. Exceeding the amount of property sold in the amount of 25% of the total assets on the balance sheet gives the transaction a large status, which means that such agreements must be approved by the meeting of shareholders. In addition, users of financial statements, such as insurers, investors or founders, are entitled to request any information, and its provision is the responsibility of the company. It is for these purposes that a special document is drawn up - a certificate of the carrying amount of assets, which is filled out on the basis of the specified calculation formula.
Calculation Example
In the balance sheet values of indicators are indicated at the beginning of the reporting period and its end. Based on the presented balance sheet, we will determine the value of assets (in thousand rubles) and analyze their dynamics for the year.
The initial data of the first two sections of the form BO-1 and the analysis of their changes| Indicator | line | as of December 31, 2014 | as of December 31, 2015 | changes absolute | growth rate in% |
| Fixed assets: | | | | | |
| Intangible assets | 1110 | 54 | 42 | -42 | -22.2 |
| OS | 1150 | 568000 | 653,000 | +85000 | +15.0 |
| Total 1 | 1100 | 568054 | 653042 | +84 988 | +15.0 |
| Current assets | | | | | |
| productive reserves | 1210 | 3955 | 5452 | +1497 | +37.9 |
| accounts receivable | 1230 | 325 | 451 | +126 | +38.7 |
| cash | 1250 | 1851 | 2985 | +1134 | +61.0 |
| Total 2 section | | 6131 | 8888 | +2757 | +45.0 |
| BALANCE | | 574185 | 661930 | +87745 | +15.3 |
From the formula already included in the balance sheet, it follows:
• total indicators for line 1100, combining positions that demonstrate the presence of fixed assets (p. 1150) and intangible assets (p. 1110), at the beginning of the reporting year amounted to 568 054 rubles. (54 + 568 000), and at the end of the year - 653 042 rubles. (42 + 653,000);
• values on line 1200 amounted to 6 131 rubles at the beginning of the year. (3 955 + 325 + 1 851), at the end of the period - 8 888 rubles. (5,452 + 451 + 2,985);
• the results of the 1st and 2nd sections are combined as a result of the balance sheet asset, that is, as of 31.12. 2015 the book value of assets (this is the line of balance of 1600) amounted to 661 930 rubles. (653 042 + 8 888), and at the end of 2014 it was 574 185 rubles, i.e. 658 054 + 6 131.
Analyst Conclusions
When comparing the absolute values obtained, the economist is given the opportunity to analyze the condition of the assets, see the tendency to increase or decrease the total availability of property, and by its categories give an assessment of the actual situation with the assets of the company on a certain date.
So, according to the presented balance, the economist calculates the changes in the values of each line, comparing the indicators at the beginning and end of the year. In the given example, the cost:
• intangible assets decreased by 12 thousand rubles;
• fixed assets increased by 85,000 rubles;
• inventories increased by 1497 rubles;
• accounts receivable increased by 126 thousand rubles;
• cash increased by 1134 rubles.
According to these data, one can judge a very confident increase in the value of the company's property for 2015: an increase in fixed assets indicates the acquisition of some fixed assets, a decrease in intangible assets was the result of the write-off of accrued depreciation, since in the 1st section the book value of assets is the residual value.
For all groups of working capital, there is also an increase in line values, which indicates the expansion of production and a noticeable increase in marketing activity, with the availability of inventories increasing by 37.9%, and cash - by 61%. This means that sales growth is outpacing the growth of inventories. Therefore, the company pursues a competent policy to search for markets and increase sales.
Analysis of accounts receivable balance sheet
Separately analyze the status of receivables. The absolute value of this indicator increased 126 thousand rubles, the growth rate by the beginning of the year was 38.7%. However, one cannot confidently talk about the undoubted growth of this indicator. Given the growth of stocks at almost the same pace (37.9%), and the increase in the monetary component by 61%, we can judge the stability of this value and the absence of an increase in debts, because in the total value of assets the share of debt of debtors remained at the level of the beginning of the year - 0, 06%:
325/574 185 * 100% = 0.056% at the beginning of the year,
451/661 930 * 100% = 0.068% at the end of the year.
Such a calculation is necessary because accounts receivable, being an asset, nevertheless divert funds from production turnover and require mandatory control of the dynamics of changes, i.e., timely collection of debts. In our example, the absence of its increase against the background of a general increase in assets is a very positive sign of the financial health of the organization. The total book value of assets (this is the line of balance of 1600) increased over the year by 87,745 rubles, or by 15.3%.
Finally
For a more detailed analysis of indicators, the economist uses many calculated coefficients. We in this article tried to tell not only how to fill out the balance sheet and calculate the amount of assets on it, but also tried to see the analytical picture behind the dry numbers of line-by-line values of this accounting form.