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

How Fixed Asset Net Book Forecasts are Calculated

Fixed asset net book value is calculated as cost less depreciation. That measures the residual working life of assets in a going concern, not fair value.

forecast for year beginning the 1st.May 2024May 2025May 2026
Forecast Net Book Value - Main Pool Assets
Net Book Value Bfwd3,50028,87334,871
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
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 Depreciation

Fixed assets with a perceived life of ten years are depreciated at 10% and with a perceived life of twenty years at 5%.

Figurewizard automatically calculates and applies depreciation to your forecasts. All you need to do is enter the average rates of depreciation for main pool assets (e.g. fixtures, equipment, computers, furniture and so on) and company cars.

Depreciation, the purchase and sale of fixed assets and application of asset financing is budgeted by Figurewizard monthly.

Net book value only represents the perceived residual useful working life of fixed assets in a going concern. The distinction between that and their potential sale value (AKA fair value) usually means that. their reported balance sheet value is almost always lower than that.

That is even more likely in the event of a forced sale.

Working capital arising from net current assets, not net assets / equity is what really measures a company's financial health and its ability to meet its liabiities on time.

Depreciation and Capital Allowances

As depreciation is a non-cash provision it is not tax deductible; HMRC requires the application of capital allowances.instead. For main pool assets these allow 100% tax relief in the year of acquisition.

If more than £1,000,000 is spent on main pool assets in any year the allowance on the balance falls to 18%. Further, the residual balance is reduced by an annual allowance of 18% a year thereafter.

Capital allowances are calculated on their reducing balance.excluding VAT.

Capital Allowances for Company Cars

AIA limit is currently (2021 / 2022) is set at £1,000,000. Annual investment allowances do not apply to company cars unless their emissions are at or below 110gm/Km of CO2.

Company cars with higher emissions will only attract an 8% AIA  and 8% again on the reducing balance in subsequent years.

Figurewizard forecasts always assumes the worst and so categorises the values of company cars you enter as subject to the 8% rate for the purpose of the forecasts.

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 at £1,200, they will be assumed to have been purchased at the rate of £100 a month.

Depreciation, charged or written back if some fixed assets are sold are all calculated and applied to the forecasts in line with that as are asset financing loans, their repayments and interest.

How Figurewizard Calculates 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 budgeting straight line depreciation is the most prudent approach.

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