# Question for calculation for balance sheet

Problem1: I';m currently working at a project in which I have to make a projection on effects on balance sheets. I simplified the problem below: Propose I invest in an asset with my own money (no loan)
Asset is worth 1000, depreciation 10 years (100 each) After 10 years, balance sheet gives: Assets: Asset = 0, cashposition 00
Liabilities: Equity = 1000 Reserve fund = 1000 (10x depreciation)
So balance sheet is not in balance....which mistake am I making here? Can somebody help me out on this?
Problem2: Propose I'm a non-profit organisation and have to invest 1000. I have no own capital and will borrow everything from a bank, repayment at 10 terms. For simplicity interest=0%.
My costprice will be 100 (= yearly depreciation) + 100 repayment of loan = 200 in total. So far so good. But after 10 year a new cycle starts: At that time I have repaid my loan and also a reserve fund of 1000! Therefore my cost price is 100 (Þpreciation).
So since my costprice was set at 200 I will make a big profit (or not). Therefore: what is the real cost-price in this example?
I hope that some of you can help me with these questions!
âœ–
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Where are you getting this "reserve fund" from? The credit side of the depreciation journal entry is "Depreciation Expense".
The correct BS should be:
Assets = DR 0 Liabilities = CR 0 Equity = CR 1000 Net Income/Loss = DR 1000
You have the same problem with your second example. If you post depreciation, the debit is Expense and the Credit is Accumulated Depreciation.
Look at your problems again this way.
Stephanie
barrytas wrote:

âœ–
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
You would create an account for your asset. Debit it with the value of the asset and then credit a capital account. You would then have to make a debit for the expense of the depreciation and credit a contra account each year. You would have a schedule for the asset and use the conta account to highlight this is an estimate. If you did reduce the value to zero there might be more entries to make. Selling or using as a trade-in will cause you to have a gain on disposition of asset.
There are many forms of non profits and your question cannot be answered without more information. Banks amortize loans and charge interest while non profits do not have costs or depr.. are you planning to start a nonprofit?

âœ–
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>

## Site Timeline

• ### Sales tax on reimbursed expenses markup

• - previous thread in General Accounting
• ### Roth IRS and Divorce

• Share To

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.