This is a Working Example of our Forecasts
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Report name: Sample Forecast

How Fixed Asset Net Book Forecasts are Calculated

This shows how forecast net book values for fixed assets are calculated. Capital allowances replace depreciation when assessing tax relief.

forecast for year beginning the 1st.May 2017May 2018May 2019
 Forecast Net Book Value - Main Pool Assets
 Net Book Value Bfwd3,50028,87334,871
 Cost30,00015,00020,000
 Sold000
 Net cost33,50043,87354,871
    
 Depreciation Charge4,6279,00211,913
 Depreciation Written Back000
 Net Depreciation Charged4,6279,00211,913
    
 Net Book Value Main Assets CFwd28,87334,87142,958
    
 Profit on Sale of Main Pool Assets000
    
 Forecast Net Book Value - Company Cars
 Net Book Value Bfwd9,00027,75119,210
 Cost25,000030,000
 Sold006,000
 Net cost34,00027,75143,210
    
 Depreciation Charge6,2498,5418,816
 Depreciation Written Back00438
 Net Depreciation Charged6,2498,5418,377
    
 Net Book Value Cars CFwd27,75119,21034,832
    
 Profit on Sale of Company Cars000

The Role of Depreiation

Fixed (non current) assets are presumed to have a useful working life in a going concern. That is measured by their rates of depreciation, for example an asset with a forecast life of 10 years is depreciated at 10% p. a. one with a life of 20 years - 5%.

For this reason, revenue arising from the disposal of fixed assets will rarely match a fair sale value; even less so if those assets are being disposed of in a forced sale.

This is why fixed assets should always discounted when assessing a company's net worth.

Budgeting of Fixed Assets

Figurewizard budgets the acquisition and disposal of fixed assets over a twelve month period. 
 
For example if you enter a year's purchases of new fixed assets worth £1,200, they are assumed to have been purchased at a rate of £100 a month.
 
Depreciation, both charged or written back on the sale of fixed assets is applied in line with that as are asset financing loans, their repayments and interest.

Calculating Depreciation

Figurewizard uses the straight line method when calculating depreciation. For example if depreciation is set at 20%, fixed assets will be depreciated to zero over five years.
 
Depreciation written back on the value of sales is similarly calculated. In addition our system always assigns the sale of fixed assets on a first in first out basis. For the purpose of forecasting and budgeteing straight line depreciation is the most prudent approach.

Depreciation and Capital Allowances

As depreciation is a non-cash provision, it is not tax deductible; it is substituted for by capital allowances instead.

Each year new main pool assets; for example machinery, fixtures, furniture, equipment and commercial vehicles attract capital allowances of 100% up to the limit for (AIA) annual investment allowance.

Capital Allowances for Company Cars

AIA limit is currently (2017 / 2018 ) set at £200,000. Annual investment allowances do not apply to company cars however unless their emissions are at or below 110gm/Km of CO2. The capital allowance for any residual main pool assets is 18%.

All of these allowances are automatically calculated and applied by our system in order to arrive at a correct forecast for corporation tax without further intervention on the part of a user.

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