Balance sheet depreciation. This balance sheet example and explanation will help you understand how the balance sheet works and how to read a balance sheet. A balance sheet is a statement of the financial position of a business which states the assets liabilities and owners equity at a particular point in time. When using the double declining balance method the salvage value is not considered in determining the annual depreciation but the book value of the asset being depreciated is never brought below its salvage value regardless of the method used.
The total of stockholders equity is equal to the amounts listed on the balance sheet for assets minus the amounts listed on the balance sheet for liabilities. Assets liabilities and ownership equity are listed as of a specific date such. In financial accounting a balance sheet or statement of financial position is a summary of the financial balances of an individual or organization whether it be a sole proprietorship a business partnership a corporation private limited company or other organization such as government or not for profit entity.
The accumulated depreciation account is used in accounting so that the recorded cost of the equipment can stay on the books and the contra asset account of accumulated depreciation is used so that the depreciation of the equipment can be kept track of year to year. Article summary setting up your balance sheet preparing the assets section preparing the liabilities section calculating owners equity and totals community qa 14 references along with the income statement and the statement of cash flows the balance sheet is one of the main financial statements of a business. It shows a companys assets liabilities and equity accounts.