## Fixed Assets Budget - Part 4

Part 4  -  Determine the Accumulated Depreciation of each Fixed Asset Category

Accumulated Depreciation is an account that "tallies" a fixed asset's depreciation expense during its useful life. In other words, it accumulates a fixed asset's reduction in value during its useful life. In our example, Murray estimated the Automobile would depreciate \$1,000 in 200X (six month period) and \$2,000 in 200Y (12 month period). As a result, the accumulated deprecation for the automobile on December 31, 200X, would be \$1,000, while the accumulated deprecation on December 31, 200Y would be \$3,000 (\$1,000 in 200X plus \$2,000 in 200Y = \$3,000). On December 31, 200Z, the Automobile's accumulated deprecation would be \$5,000 (\$1,000 in 200X plus \$2,000 in 200Y plus \$2,000 in 200Z = \$5,000).

Recall from the previous discussions, Murray estimated the Office Equipment would depreciate \$1,400 in 200X and \$3,200 in 200Y. As a result, the accumulated deprecation for the computer & Accessories as of December 31, 200X would be \$1,400, while the accumulated deprecation as of December 31, 200Y would be \$4,600 (\$1,400 in 200X plus \$3,200 in 200Y = \$4,600). Assuming no additional purchases were made into this fixed asset category, the Office Equipment's December 31, 200Z accumulated deprecation would be \$7,800 (\$1,400 in 200X plus \$3,200 in 200Y plus \$3,200 in 200Z = \$7,800).

The above accumulated deprecations will appear under the Fixed Asset Section of Murray's 200X and 200Y Forecasted Balance Sheet.

Categories: Forecasting