The Fixed Assets Section of the Balance Sheet
The fixed assets section of the balance sheet is one of the easiest sections to read and understand. This article is written to describe and illustrate some simple examples of the fixed assets section. I am not teaching the reader about the accounting system(s) used for fixed assets or how to calculate depreciation. This article is to help the value investor understand how to read this section of a balance sheet.
I will start out with teaching some basic terms used on the balance sheet. From there, I will describe the most basic presentation format and then begin to expand this section so the reader can gain a more in-depth understanding of the fixed assets section. Finally, I will explain the importance of understanding the corresponding notes associated with fixed assets.
The balance sheet is divided into two sides, the ‘Assets’ side and the ‘Liabilities and Equity’ side. The ‘Assets’ side has three
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