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

See similar textbooks

Similar questions

2. Determining the source of finance comes under ____________________function. a. Investment Decisionb. Liquidity Managementc. Acquire necessary capitald. Tax Management
Which of the following is the correct way of calculating Closing Capital? a.Opening capital +Retained Earning + Reserves & Surplus-Drawings b.Opening capital +Retained Earning + Reserves & Surplus+Drawings c.Opening capital +Retained Earning - Reserves & Surplus-Drawings d.Opening capital -Retained Earning + Reserves & Surplus-Drawings
Please answer Part B and C. The following are answers from previous questions in case you need the below information. Operating Cash Flow: Operating Cash Flow (OCF)= Net Income + Depreciation – Increase in Working Capital. OCF=419,573+11,751-110,249= 321,075 Net Capital Spending: Net capital expenditures (NCE) = Fixed asset (current period) - Fixed asset (prior period) + depreciation (current period) NCE=258,251-261,779+11,751 =8,223 iii. Change in Net Working Capital Net Working Capital (NWC)= Current assets- current Liabilities Year 2019 : NWC =421,609-148,087 =273,522 Year 2020 : NMW= 550,572-166,801 =383,771 Change in Net Working Capital = 383,771-273,522=110,249 Sl.NO PARTICULARS AMOUNT EBIT + DEPRECIATION - TAXES = 597976+11751-178055= $ 431,672 ii] NET CAPITAL SPENDING: ENDING NET FIXED ASSETS - BEGINNING NET FIXED ASSETS + DEPRECIATION = 258251-261779+11751= $ 8223 iii] CHANGE IN NET WORKING…
Working capital is also referred to as O Paid-in capital O Retained Earnings O Current Assets O Equity
3) Identify and explain the common compositions of working capital. 4) Identify and explain the techniques and methods to manage inventor nd ovnlnin the techniques and methods to manage receivab
Working capital is the difference between your total assets and total liabilities. * Right O Wrong
You can include Fixed Assets in the Net Working Capital formula. T/F
If all values carry a + sign, cash flow before taxes is represented by the following equation:a. gross income - expenses - depreciation - initial investment + salvage valueb. gross income - expenses - depreciation + salvage valuec. gross income - expenses - initial investment + salvage valued. gross income - expenses + initial investment + salvage value
Refers to the capital recovery factor O (F/A,i,n) O (P/A,i,n) O (A/F,i,n) O (A/Pi,n)
A capital expenditurea. adds to an asset.b. is expensed immediately.c. is a credit like capital (equity).d. records additional capital.
Explain in words the difference between net working capital and net operatingworking capital.
What are three steps involved in the calculation of cost of capital for the company.