2. Example of a fixed asset rollforward

Let’s take a look at an example of a fixed asset rollforward which has two components: cost rollforward and accumulated depreciation rollforward:

We will review the amounts in the rollforward in more detail. As you follow descriptions of transactions presented below, keep in mind that in the table above positive numbers represent debit entries and negative numbers represent credit entries.

Land

• The beginning cost is $200.
• There was no activity during the period, so all amounts for additions, disposals and transfers are zeros.
• The ending cost balance is $200.
• There is no accumulated depreciation for land (i.e., land is not depreciated), thus, all amounts for accumulated depreciation are zeros.

Buildings

• The beginning cost for buildings is $3,860.
• During the period, the company purchased (and/or transferred from construction in progress a portion of the amount) $360 worth of fixed assets.
• The company also disposed of buildings costing $55. Note that the reduction in related accumulated depreciation is also $55, which implies the disposed of assets were fully depreciated.
• There was a transfer of $5 from machinery and equipment to buildings. Note that there also was a related transfer of accumulated depreciation of $3 (so, net cost of $2 was transferred from machinery and equipment to buildings). Transfers from one asset group to another as not very common, but do take place sometimes (e.g., when an asset was misclassified into a fixed asset class initially).
• All noted transactions result in the ending cost for buildings of $4,170.
• The beginning accumulated depreciation for buildings is $1,200.
• During the period, the company incurred $100 of depreciation expense which is reflected in the Additions column.
• There was also a disposal of fixed assets with the cost of $55 and related accumulated depreciation of $55 (as noted above).
• There was also a transfer of accumulated depreciation from machine and equipment to buildings (as noted above).
• These transactions resulted in the ending accumulated depreciation balance of $1,248.

Machinery, equipment

• The beginning cost for machine and equipment is $8,720.
• During the period, the company added (and/or transferred from construction in progress a portion of the amount) $1,100 of assets.
• The company also disposed of $420 of assets. There was also a disposal of related accumulated depreciation in the amount of 380 (so, net cost disposed of was $40).
• There was a transfer of fixed assets from machine and equipment with the cost of $5 and accumulated depreciation of $3 (as noted above).
• These transactions resulted in the ending cost balance of $9,395.
• The beginning balance of accumulated depreciation was $4,300.
• During the period, the company incurred depreciation expense of $1,200.
• The company also disposed of some assets with accumulated depreciation of $380 (as noted above and shown in the Disposals column).
• These transactions resulted in the ending balance of accumulated depreciation of $5,117.

Construction in progress

• Construction in progress represents fixed assets under construction (e.g., not in use). The beginning cost is $650.
• During the period, the company incurred additional expenditures for assets under construction in the amount of $50.
• The company also finished and transferred to other fixed asset classes (i.e., buildings and/or machinery and equipment) $100 worth of assets. This is shown in the Disposals column, but could also be shown in the Transfers column (so, a transfer from construction in progress to other fixed asset classes).
• These transactions result in the ending cost balance of $600.
• Construction in progress assets are not depreciated until they are put in use (i.e., transferred to fixed assets). Thus, all amounts for depreciation of construction in progress are zeros.

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