It is incorrect that the original price of fixed assets is greater than the total assets in the enterprise report. The original price of fixed assets is actually an integral part of the total assets, which includes the initial investment of fixed assets, such as construction cost, purchase price, transportation and miscellaneous expenses, installation cost, etc., and is an important index reflecting the investment and production scale of fixed assets of enterprises.
the original value of fixed assets is different from the total amount of fixed assets. The total amount of fixed assets is the net value of fixed assets calculated on the statistical day according to accounting standards, that is, the balance after deducting accumulated depreciation from the original value of fixed assets. Accumulated depreciation is deducted year by year according to the use of assets to reflect the degree of wear and aging of assets.
China's accounting standards will list the original price of fixed assets, accumulated depreciation and net value of fixed assets, but not including land. In contrast, international accounting standards are more detailed, which will reveal different types of fixed assets such as land and buildings, factories and equipment, and the calculation of accumulated depreciation. In the balance sheet, China will list the projects under construction separately, while international standards do not have this item.
to sum up, the original price of fixed assets should be less than or equal to the total assets, because the total assets are the net value of fixed assets minus depreciation, not the original cost. Understanding the relationship between the two is very important for correctly interpreting the financial statements of enterprises.