The book value of the assets is the balance line 1600. The balance sheet

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The company's assets, or rather, their combined value, are the necessary resources to ensure the production of new products, the possibility of expanding sales markets and upgrading existing facilities, finding new partners and customers, that is, the financial and economic side of the company's life.

To learn more about this economic indicator, its book value and its role in the life support of the company, this publication will help.

Non-current assets

All property of the organization is divided into non-current and current assets. The former include means that are not involved in the production process, but ensure the creation of a product or the provision of services. This is:

• fixed assets - workshops, buildings, structures, i.e. premises adapted for production, as well as equipment, machines, installations and machines that provide the process itself;

• intangible assets, i.e. property that does not have tangiblematerial form, but able to noticeably raise the image of the company and create a successful reputation for it (these include current computer programs, licenses, brands, trademarks, and much more).

All 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 accounted for at residual value (that is, the initial value reduced by the amount of depreciation). Depreciation charges are reflected in the accounting registers of the company, and this amount cannot be seen in the balance sheet.

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 (on accounts and on hand) and cash equivalents;

• receivables, i.e. debts of buyers and customers for goods exported but not yet paid for, or company payments as an advance payment for the purchase of goods or services.

The listed property groups form the second section of the balance, occupying line 1200 - “Current assets”.

Asset Accounting

The total value of the property of these sections form the asset of the balance - its left side, and indicate the presence of property in the company. It is necessary to take into account its cost, since this absolute indicator is involved in most of the analytical calculations. Company propertyis accumulated in the balance, divided by purpose:

▪ in the first section (p. 1100) - non-current assets;

▪ in the second (p. 1200) negotiable.

When these lines are combined, the book value of the assets is created. This is the balance line 1600 and is calculated using the following formula:

Page 1600=str.1100 + str. 1200

How to fill in the balance

The accountant, posting the amounts corresponding to the balances in the accounts of fixed assets, intangible assets, stocks, finances and debts of debtors, fills in the right, i.e., the active side of the balance sheet. Line 1600 of the balance sheet shows the total value of all property held by 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 balance totals of the right and left sides are always the same, since the amount of assets cannot differ from own sources.

Where the indicator is 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-by-line values. This is the book value of the assets. Where to look at this value is already known: page 1600 indicates the presence of property on a certain date.

Economists rely on this indicator to determine various ratios, for example, calculating the profitability of production or asset turnover.

The obligation to calculate the value of property according to the balance sheet is legally established to ensure large transactions for the sale of assets. To determine the size of the transaction, the book value of the assets (this is line 1600 of the balance sheet) is compared with the value of the property sold under the contract. Exceeding the amount of the sold property in the amount of 25% of the total value of assets on the balance sheet gives the transaction the status of a major one, which means that such agreements must be approved by the shareholders' meeting. In addition, users of financial statements, such as insurers, investors or founders, have the right 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 book value of assets, which is filled out on the basis of the specified calculation formula.

Calculation example

In the balance sheet, the 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.

Initial data of the first two sections of the BO-1 form and analysis of their changes

Indicator	string	as of 2014-31-12	as of 2015-31-12	changes absolute	growth rate in %
Non-current assets:
NMA	1110	54	42	-42	-22, 2
OS	1150	568000	653000	+85000	+15, 0
Total 1 spread	1100	568054	653042	+84988	+15, 0
Current assets
inventory	1210	3955	5452	+1497	+37, 9
receivables	1230	325	451	+126	+38, 7
cash	1250	1851	2985	+1134	+61, 0
Total Section 2		6131	8888	+2757	+45, 0
BALANCE		574185	661930	+87745	+15, 3

From the formula already included in the balance sheet it follows:

• totals for line 1100, which combines positions that demonstrate the availability of fixed assets (line 1150) and intangible assets (line 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);

• The values in 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. (5452 + 451 + 2985);

• The results of the 1st and 2nd sections are combined as a result of the balance sheet asset, ie as of 31.12. In 2015, the book value of the assets (this is the balance sheet line 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's findings

When comparing the obtained absolute values, the economist is given the opportunity to analyze the state of assets, see trends in the increase or decrease in the total availability of property, and, by its categories, assess the actual situation with the company's assets on a certain date.

Thus, according to the presented balance sheet, the economist calculates the changes in the values of each line, comparing the indicators at the beginning and end of the year. In the example above, the cost is:

• Intangible assets decreased by 12 thousand rubles;

• OS increased by RUB 85,000;

• Inventories increased by RUB 1497;

• accounts receivable increased by 126 thousand rubles;

• cash increased by RUB 1134

According to these data, one can judge a very confident increase in the value of the company's property in 2015: an increase in fixed assets indicates the acquisition of a fixed asset, a decrease in intangible assets was the result of depreciation, since in the 1st section, the book value of assets - residual value.

For all groups of working capital, there is also an increase in line-by-line values, which indicates the expansion of production and a noticeable increase in sales activities, with inventory increased by 37.9%, and cash - by 61%. This means that sales growth outpaces the growth of inventories. Consequently, the company pursues a competent policy to search for markets and increase product sales.

Analysis of receivables bybalance

The state of accounts receivable is analyzed separately. The absolute value of this indicator increased by 126 thousand rubles, the growth rate by the beginning of the year was 38.7%. However, it is impossible to speak with confidence about the undoubted growth of this indicator. Taking into account the growth of inventories at almost the same pace (37.9%), and the increase in the cash component by 61%, one can judge the stability of this value and the absence of an increase in debts, because the share of debtors in the total value of assets remained at the level of the beginning of the year - 0, 06%:

325 / 574 185100%=0.056% at the beginning of the year, 451 / 661,930100%=0.068% at the end of the year.

Such a calculation is necessary, since receivables, 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 the general increase in assets is a very positive sign of the financial he alth of the organization. The total balance sheet value of assets (this is line 1600 of the balance sheet) increased over the year by 87,745 rubles, or by 15.3%.

In closing

For a more detailed analysis of indicators, an economist uses many calculated coefficients. In this article, we tried to tell not only how to fill in the balance sheet and calculate the amount of assets on it, but also tried to see the analytical picture behind the dry numbers of the line-by-line values of this accounting form.