Part 2  -  Determine the Fixed Assets Required for your Business

The next section of the Fixed Asset Budget is to determine your Fixed Asset Requirement for each forecasted business year. This involves determining what fixed assets you need, how much each fixed asset will cost, the month(s) you plan to order each fixed asset, and the month (s) you are required to pay for each fixed asset.

Since Murray forecasted periods are 200X and 200Y, he must determine the Fixed Assets his business will require during this time frame. Lets assume, the only other fixed assets Murray's business requires in 200X and in 200Y is a photocopier and a laser printer. The Photocopier will be ordered in June 200X and paid for and received in July of 200X. The Laser printer will be ordered in January 200Y and will also be paid for in January 200Y. Therefore, Murray would develop the following Fixed Asset Budget for 200X and 200Y;

The dates and values shown in the above chart are extremely important. Moreover, the photocopier and its cost will appear under the Fixed Assets section of Murray's 200X Forecasted Balance Sheet . In addition, his 200X Forecasted Cash Flow Statement will show cash of $4,500 leaving the company in July to pay for the photocopier. The Laser printer and its cost will appear under the Fixed Assets section of Murray's 200Y Forecasted Balance Sheet . In addition, his 200Y Forecasted Cash Flow Statement will show cash of $1,200 leaving the company in January to pay for the Laser Printer.