Nonprofit Accounting Basics
Net Investment in Fixed Assets
Note: Articles published before January 1, 2017 may be out of date. We are in the process of updating this content.
This calculation subtracts any existing long-term debt related to fixed assets (e.g., vehicle loan, mortgage, leasehold improvement loan, etc.) from the value of fixed assets. The value of fixed assets (or net fixed assets) is the cost less accumulated depreciation. The net investment (or equity) in fixed assets is essentially a mini fixed assets balance sheet. The total value of fixed assets less fixed asset-related liabilities = net investment (equity) in fixed assets.
Net Fixed Assets – Fixed Asset-related Long-Term Debt
Signal: This will usually be a positive number; a negative number would mean you owe more than the fixed assets are worth.
Calculation: This amount may not mean much by itself but will be useful to know in terms of overall net assets composition.
Caveat: None.