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LouP said:
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Hi - can anyone help - I must be missing something somewhere!
Have just taken on a sole trader client. They have provided me with copy of their accounts from last year. I don't usually produce a full balance sheet report for my sole traders, but thought would give it a go and trial some software in the meantime :-)
Anyway, as part of the previous accounts, I have the following calculation for depreciation. However, I can't work out how the charge for the year was calculated. The notes say 20% straight line basis. What am I missing???? Thanks. Louise
Cost
April 14 - £2098
Additions - £1173
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As at Mar 15 - £3271
Depreciation
April 14 - £1455
Charge for year - £745
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As at Mar 15 - £2200
NBV
Mar 14 - £643
Mar 15 - £1071
”
Bit late coming to this query, but yes, you definitely need to get hold of a copy of the Fixed Asset Register. Depreciation will usually be calculated by month using the 20% Straight Line for Year (so, the monthly depreciation will be 20% / 12 Months to give 1.66666% Per Month. In the accounts you are just seeing the totals for the year, but assets in the year to MAR14 could have been purchased anytime in that year. Where an asset hasn't been owned for a full year, the actual % depreciation charge could be anywhere between 1.666% and 18.333%. The only way you'll find how much depreciation has been charged for a particular asset in the year is to see the Fixed Asset Register, without that trying to agree the depreciation figures will be just a moving feast. I don't think the issue is disposals, because it looks like there has been too much depreciation, perhaps the depreciation on a particular item could have been 'accelerated', this means that an asset is going to becoming obselete sooner than 5-years and the accountant is getting this depreciation charged quicker than it normally would.
Fixed Asset Register is what will give the answers.
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