Question

Calculating Net Capital Spending (L04) Wallace Driving School's 2020 balance sheet showed net fixed assets of $4 million, and the 2021 balance sheet showed net fixed assets of $4.2 million. The company's 2021 income statement showed a depreciation expense of $350,000. What was net capital spending for 2021? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Net capital spending?

Answer 1

The net capital spending for 2021 is -$150,000.

Step-by-step explanation:

Net capital spending can be calculated by subtracting the depreciation expense from the change in net fixed assets. In this case, the change in net fixed assets is $4.2 million - $4 million = $0.2 million. Therefore, the net capital spending for 2021 is $0.2 million - $350,000 = -$150,000.