What is a fixed asset rollforward?

May 16, 2013

Fixed asset (property, plant and equipment) rollforwards represent an important accounting tool for period end closes, financial statement preparation and so forth. In this article we discuss the nature and provide an example of a fixed asset rollforward.

1. Nature of a fixed asset rollforward

Fixed assets (also called property, plant and equipment) may represent a significant number on the balance sheet of a company. Thus, it is critical to maintain good records about fixed assets and related fixed asset activity. Usually, fixed assets are recorded in several balance sheet accounts. Each fixed asset account is devoted to a particular asset class (e.g., land, buildings, leasehold improvements). There are also corresponding accounts for accumulated depreciation (e.g., accumulated depreciation for buildings, leasehold improvements).

During a period, a lot of activity may take place within fixed asset accounts. As part of a period end accounting close, accountants may prepare fixed asset rollforwards.

Fixed asset rollforward represents a schedule showing - for fixed asset historical costs and accumulated depreciation, in total or by fixed asset class - balances at the beginning of a period, additions, disposals, transfers, and balances at the end of a period.

Fixed asset rollforwards (may also be called property, plant and equipment rollforwards) are used to analyze summarized information about movements in fixed asset cost and accumulated depreciation. Such rollforwards are also used to prepare cash flow statements. In addition, financial statement auditors may use fixed asset rollforwards in their auditing procedures.

Nowadays most companies use some kind of asset management software for fixed asset tracking. Such software may be a simple spreadsheet or sophisticated fixed asset software component (module) within large enterprise systems. Such software (except for simple spreadsheets) usually has reports which accountants can run to generate fixed asset rollforwards and thus, eliminate the manual process.

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