Question

The change in Net Fixed Assets equals:

	1.	capital expenditures minus depreciation.
	2.	capital expenditures plus depreciation.
	3.	capital expenditures minus cash flow from operations.
	4.	Gross fixed assets minus depreciation.
	5.	Gross fixed assets minus cash purchases.

Answer 1

The change in Net Fixed Assets equals :

(1) Capital Expenditure minus depreciation

Explanation :-

Capital expenditures increases the value of fixed asset and depreciation reduces the value of fixed asset .

So, for any accounting year, the change in net fixed asset will be equal to capital expenditure minus depreciation .

For example :- Suppose beginning net fixed asset amounts to $1000 and capital expenditure during the year is $700 and depreciation is $200 so , the change in net fixed asset must be $ 700 - $200 = $500 and the ending net fixed asset will be equal to $1000 + $500 = $1,500