Balance Sheet Depreciation


What is Accumulated Depreciation?

Balance  Sheet DepreciationBalance sheet depreciation is also known as accumulated depreciation and reduces the total value of the fixed assets.

A Fixed asset has a value to a business, and the value is written off over a fixed period of time. There are 2 main methods of writing off an asset – straight-line method and reducing balance.

The length of time an asset is written off can depend on the type of asset, it usually is either 3 or 5 years, but for some assets, it can be more. If you are unsure of the best methods of calculating your fixed assets, speak to your accountant, and they will be able to advise you.

To help calculate your figures, use our depreciation calculator, enter a few simple details and it will calculate your depreciation.

We also have a template to calculate all your depreciation over a 10 year period. It is simple to use, enter the details of the asset, purchase value and number of years to depreciate it by and it will calculate the figure year by year.

Depreciation Schedule

Accounting for Balance Sheet Depreciation

As with all accounting, a double entry posting needs to be completed. The entries are as follows:

Depreciation is posted as an expense each month to the profit and loss account. Also, it is posted to the Balance sheet to reduce the value of the fixed assets, also known as accumulative depreciation.

Balance Sheet Depreciation Example

Balance sheet showing depreciation

Business ABC owns a computer when purchased it cost £540. The business uses straight-line depreciation method over 3 years. The computer has been owned for 12 months.

Monthly depreciation is posted to expense on the Profit & Loss at £15 per month.

The balance sheet accumulative depreciation is the figure for the whole 12 months and is, therefore, £180.

Fixed Assets 540
Accumulated depreciation 180
Value of fixed assets 360

Return from balance sheet depreciation to balance sheet page.