The rollforward as the backbone of PP&E testing
Most property, plant and equipment procedures hang off the rollforward: vouching additions, testing disposals and the gain or loss, recomputing depreciation, and agreeing the closing balances to the trial balance. It also supports the disclosures ASC 360-10-50-1 requires: balances of major classes, accumulated depreciation and depreciation expense for the period.
A rollforward that does not foot or does not agree to the ledger points to an unrecorded movement. Resolve every break before sampling from it. Recompute the depreciation line with the depreciation calculator.
Common questions
What is a fixed asset rollforward?
A schedule that starts from opening cost and accumulated depreciation for each asset class, adds additions and depreciation, removes disposals, and arrives at the closing balances. The closing figures must agree with the general ledger.
What does a break in the rollforward mean?
The movements do not explain the change in the ledger balance. Common causes are unrecorded disposals, additions posted straight to expense or to the wrong class, depreciation journals that differ from the register, and transfers out of construction in progress recorded on one side only.
How is the gain or loss on disposal calculated?
Gain or loss = proceeds − net book value disposed, where net book value = cost disposed − accumulated depreciation disposed. The total should agree with the income statement.
What disclosures does the rollforward support?
ASC 360-10-50-1 requires depreciation expense for the period, balances of major classes of depreciable assets, accumulated depreciation, and a description of the depreciation methods.
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