Net Block (Fixed Assets) Definition

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

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.