| forecast for year beginning the 1st. | May 2024 | May 2025 | May 2026 |
| Forecast Net Book Value - Main Pool Assets | |||
| Net Book Value Bfwd | 3,500 | 28,873 | 34,871 |
| Cost | 30,000 | 15,000 | 20,000 |
| Sold | 0 | 0 | 0 |
| Net cost | 33,500 | 43,873 | 54,871 |
| Depreciation Charge | 4,627 | 9,002 | 11,913 |
| Depreciation Written Back | 0 | 0 | 0 |
| Net Depreciation Charged | 4,627 | 9,002 | 11,913 |
| Net Book Value Main Assets CFwd | 28,873 | 34,871 | 42,958 |
| Profit on Sale of Main Pool Assets | 0 | 0 | 0 |
| Forecast Net Book Value - Company Cars | |||
| Net Book Value Bfwd | 9,000 | 27,751 | 19,210 |
| Cost | 25,000 | 0 | 30,000 |
| Sold | 0 | 0 | 6,000 |
| Net cost | 34,000 | 27,751 | 43,210 |
| Depreciation Charge | 6,249 | 8,541 | 8,816 |
| Depreciation Written Back | 0 | 0 | 438 |
| Net Depreciation Charged | 6,249 | 8,541 | 8,377 |
| Net Book Value Cars CFwd | 27,751 | 19,210 | 34,832 |
| Profit on Sale of Company Cars | 0 | 0 | 0 |
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.
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.
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.
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.
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.