How To Find Average Total Assets On Balance Sheet

Average Total Assets

Introduction

Average total assets are the boilerplate carrying value of assets that are recorded on the residuum sail at the dissimilar remainder sail dates. Usually, the carrying value of assets at the end of the previous year and those at the end of the current year are used in the calculation to notice boilerplate total assets on the residual sheet.

The average total avails are usually used for calculation of nugget turnover and render on asset ratio to measure the company'due south ability in the utilization of the resources, its avails, to generate sales revenues and profit respectively.

Average Total Avails Formula

Average total assets can be calculated past using total assets value at the stop of the current year plus total assets value at the finish of the previous year and so split up the issue past two.

Average Total Assets Formula

Sometimes, total assets at the cease of each month of the current twelvemonth are used to find average full avails instead. In this case, all of the twelve total assets (of twelve months) are summed in total and divide by twelve to get average total assets.

However, this state of affairs normally simply happens in the management account where direction accountant feels that the use of the average of twelve-month full assets gives more than accurate results in evaluating the performance of the company.

In this case, the average total assets would be calculated as in formula below instead:

Average Total Assets Formula n period

where P = Period and north is the number of period, then

P1 = Period one

P2 = Menses ii

Pn= Menses northward

In this case, if we use average twelve months of full avails then n = 12 where P1 would be outset month and P2 would be second calendar month… and P12 would be twelfth month.

Average Full Avails Instance

For example, we have the extracted balance sheet as beneath:

Extracted Residue Canvas		31 December 2019	31 Dec 2018
Current assets		$	$
	Cash and greenbacks equivalents	11,296	xiv,862
	Receivables	4,250	3,520
	Inventories	10,396	8,580
		25,942	26,962
Non-electric current assets
	Equipment	60,782	51,640
	Vehicles	87,500	87,500
	Accumulated depreciation	(xix,387)	(17,187)
		128,895	121,953
Other assets		2,450	1,850
Full assets		157,287	150,765

What are the average total assets based on the balance sheet above?

Calculate Average Total Assets

In the balance sail in a higher place, we run into that:

Total avails value at 31 Dec 2019 = $157,287

Total assets value at 31 Dec 2018 = $150,765

And so

Boilerplate Total Assets = (157,287 +150,765)/ii = $154,026

So, the boilerplate total avails are $154,026 which nosotros can apply to calculate various ratios, such as nugget turnover and average render on assets.