The balance sheet of a business shows its financial position at a specific point in time. The balance sheet has two columns, the first one showing the company's assets and the second one showing the company's liabilities and shareholders' equity. There are two types of assets: current and fixed assets. Current assets include cash and items that will become cash in one year, and fixed assets include items that will remain useful to the business one year or later from the date the balance sheet is prepared.
List the company's fixed assets. Many of these items are big, unmovable items, such as buildings, machinery and fixtures. Other common fixed assets include vehicles and furniture.
Write the value of your fixed assets to correspond with the names of these items. Use the values of these items at purchase even if their market values have dropped. For example, if you paid $100,000 for a truck and the dealer now sells the same model for $75,000, write down $100,000 as the value of the asset.
Deduct depreciation from each fixed asset item except for land and buildings. Depreciation represents the amount by which an asset has lost value. Because land and building don't always go down in value, you don't depreciate land and building assets in accounting. There are many depreciation methods, but most accountants use the straight-line method. It depreciates an asset by a certain amount over a specified period of time. For example, if you buy a piece of machinery for $50,000 and expect it to lose all value in 10 years, you will depreciate it by $5,000 each year (from $50,000 / 10 years).
Determine the value of each fixed asset after taking depreciation into account. For example, the $50,000 piece of machinery will have a recorded value of $45,000 after its first year.
Add up all the values of the fixed assets to obtain the total fixed asset. Transfer this figure to the balance sheet under the "Assets" column.
