24. Net Fixed Assets and Depreciation On the balance sheet, the net fixed assets (NFA) account is equal to the gross fixed assets (FA) account (which records the acquisition cost of fixed assets) minus the accumulated depreciation (AD) account (which records the total depreciation taken by the firm against its fixed assets). Using the fact that NFA = FAAD, show that the expression given in the chapter for net capital spending, NFAend - NFAbeg + D (where D is the depreciation expense during the year), is equivalent to FAend - FAbeg.

24. Net Fixed Assets and Depreciation On the balance sheet, the net fixed assets (NFA) account is equal to the gross fixed assets (FA) account (which records the acquisition cost of fixed assets) minus the accumulated depreciation (AD) account (which records the total depreciation taken by the firm against its fixed assets). Using the fact that NFA = FAAD, show that the expression given in the chapter for net capital spending, NFAend - NFAbeg + D (where D is the depreciation expense during the year), is equivalent to FAend - FAbeg.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

24. Net Fixed Assets and Depreciation On the balance sheet, the net fixed assets (NFA) account is equal to the gross fixed assets (FA) account (which records the acquisition
cost of fixed assets) minus the accumulated depreciation (AD) account (which records the total depreciation taken by the firm against its fixed assets). Using the fact that
NFA = FA – AD, show that the expression given in the chapter for net capital spending, NFAend - NFAbeg + D (where D is the depreciation expense during the
year), is equivalent to FAend - FAbeg.

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