Sunday, December 18, 2016

Net Block (Fixed Assets) Definition


Net Block of Fixed Assets. Finance. Investments. Stocks. Stcok Market
Happy frog imagining the concept of Net Block of Fixed Assets

Meaning:

‘Net Block’ represents the original cost of acquisition of assets after adjusting for or deducting depreciation for wear-and-tear.

Conventionally in the financial statements fixed assets are depicted under three blocks or groups as under:

1.     Gross
2.     Depreciation
3.     Net

Each of these blocks are further classified into:

1.     Amount standing at the beginning of the year (Opening Balance)
2.     Additions during the year
3.     Deletions (sold or disposed off) during the year
4.     Amount standing at the end of the year (Closing Balance)

‘Net Block’ is obtained after deducting depreciation from the ‘Gross Block’.

Formula:

Formula for computing Net Block of Fixed Assets
Formula for computing Net Block of Fixed Assets

Example:

Following Example shall make things more clear:



GROSS BLOCK
DEPRECIATION
NET BLOCK
Opening Balance
Additions
Closing Balance
Opening Balance
For the year
Closing Balance
Opening Balance
Closing Balance
A1
B1
C1
A2
B2
C2
A3 = (A1-A2)
C3 = (C1-C2)
10000
5000
15000
1000
1500
2500
9000
12500

In conclusion net block of fixed assets is the original cost, adjusted for depreciation charge.


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