How To Find Average Total Assets
Definition: "Average Total Assets" is calculated by adding the beginning and ending values for total assets for that year and then divide it by 2. The formula is: (Beginning Total Assets + Ending Total Assets) / 2
Example:
CIM Ltd. has the following data for the year ended 31 December 2011.
Buildings: $220,000 (1 Jan 2011); $218,000 (31 Dec 2011)
Motor vehicles: $90,000 (1 Jan 2011); $85,000 (31 Dec 2011)
Equipment: $25,000 (1 Jan 2011); $20,000 (31 Dec 2011)
Stocks: $110,000 (1 Jan 2011); $120,000 (31 Dec 2011)
Trade debtors: $55,000 (1 Jan 2011); $65,000 (31 Dec 2011)
Bills receivables: $21,000 (1 Jan 2011); $16,000 (31 Dec 2011)
Cash: $70,000 (1 Jan 2011); $66,000 (31 Dec 2011)
Find the average total assets.
Solution:
Beginning Total Assets = 220,000 + 90,000 + 25,000 + 110,000 + 55,000 + 21,000 + 70,000 = $591,000
Ending Total Assets = 218,000 + 85,000 + 20,000 + 120,000 + 65,000 + 16,000 + 66,000 = $590,000
Average Total Assets = (591,000 + 590,000) / 2 = $590,500
Example:
CIM Ltd. has the following data for the year ended 31 December 2011.
Buildings: $220,000 (1 Jan 2011); $218,000 (31 Dec 2011)
Motor vehicles: $90,000 (1 Jan 2011); $85,000 (31 Dec 2011)
Equipment: $25,000 (1 Jan 2011); $20,000 (31 Dec 2011)
Stocks: $110,000 (1 Jan 2011); $120,000 (31 Dec 2011)
Trade debtors: $55,000 (1 Jan 2011); $65,000 (31 Dec 2011)
Bills receivables: $21,000 (1 Jan 2011); $16,000 (31 Dec 2011)
Cash: $70,000 (1 Jan 2011); $66,000 (31 Dec 2011)
Find the average total assets.
Solution:
Beginning Total Assets = 220,000 + 90,000 + 25,000 + 110,000 + 55,000 + 21,000 + 70,000 = $591,000
Ending Total Assets = 218,000 + 85,000 + 20,000 + 120,000 + 65,000 + 16,000 + 66,000 = $590,000
Average Total Assets = (591,000 + 590,000) / 2 = $590,500