 |
| 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.
