## Formula to Calculate Total Assets

In the accounting terminology, assets can be termed as anything that a business or the company would own which has some economic value and can be liquidated. So the formula to calculate assets is given below.

Assets can be further categorized into two broad main categories that are non-current assets and current assets. Both categories can be further subdivided into different categories. Total assets are nothing, but the summation of all non-current and current assets and this total should equal the sum of stockholders’ equity and total liabilities combined.

Below is the Assets Formula:

**Assets Formula = Liabilities + Owner’s Equity**

### Explanation

The first part of accounting equation is total liabilities which depicts all of the liabilities that company owes which depicts how much has the firm has taken to support its cash generating units which are called as assets and those shall include payables, long term loans, creditors, etc. and the second part of the formula is Owner’s equity which is the sum of money that is invested by the owners of the business and shareholders which include both equity share capital and preference share capital and it would further include profit and loss including any reserves created.

### Examples

#### Example #1

**The following data is related to Smith Ltd:**

**Common Stock: 635,000****Preferred Stock: 247,000****Retained Earnings: 345,000****Accumulated other comprehensive income: 131,000****Investment in Warner ltd. at fair value (Original Cost Rs 135,000): Rs 165,000 which is classified as Investment Available for sale.**

**You are required to calculate the Assets for Smith Ltd.**

**Solution:**

We are given all the components of equity and total liabilities as well, we just need to add up all the equity components and add that total to total of liabilities to arrive at total assets figure.

**Note:** Investment unrealized gain were already included in other comprehensive income component and hence we will not consider.

Below is given data for calculation of assets

The calculation of total assets can be done as follows-

= 770,000 + 1,358,000

Total Assets will be-

**Total Assets = 2,128,000**

#### Example #2

**Below is the balance sheet report of Federal Bank, one of the upcoming foreign banks and below has been extracted from its annual report. You are required to calculate the Assets.**

**Solution:**

Below is given data for calculation of assets

The calculation of owners equity can be done as follows-

Owners Equity = 394.43 + 11810.80

**Owners Equity = 12205.23**

The calculation of liabilities can be done as follows-

Total Liabilities = 123525.99 + 2801.92

**Total Liabilities = 126327.91**

The calculation of total assets can be done as follows-

Total Assets = 126327.91 + 12205.23

Total Assets will be-

**Total Assets = 138533.14**

#### Example #3

**Below is the balance sheet report of GOOGLE which is extracted from its annual report with some moderation in the figures.**

**Solution:**

Below is given data for calculation of assets

Total Assets will be-

Total Assets = 257824600 + 144472900

**Total Assets = 402297500**

### Relevance and Use of Assets Formula

Assets equation which is discussed above is very simple, but it has a much detailed explanation. This formula depicts what the company is owing to the outside world and what the company has with itself which is known as equity. Both of these sum up to create total assets. Both shareholders’ equity and liabilities shall represent how the assets of the firm are financed. Say If it’s financed through outside funds i.e. debt, it’ll be shown as a liability, and if the same is financed through issuing equity share to its shareholders or say the investors, it shall be shown in the owner’s equity or say in shareholders’ equity.

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