Question

A corporation has a balance sheet that showed Net fixed assets of $750,000 at the beginning of the year. It ended the year with a balance sheet that showed Net fixed assets of $900,000. Its income statement for the year showed Depreciation of $200,000. What was the corporation's net capital spending for the year?

Answer 1

The answer amounts to $350,000

Step-by-step explanation:

The net capital spending is the amount of money which the firm or the business spends on the acquired fixed assets during the accounting period or year.

The formula to compute the net capital spending (NCS) as:

Net Capital Spending (NCS) = End of the period fixed assets – fixed assets at the starting of the year + depreciation.

where

Fixed assets at the end of the year amounts to $900,000

Fixed assets at the beginning of the year amounts to 750,000

Depreciation amounts to $200,000

Putting the values above:

NCS = $900,000 - $750,000 + $200,000

NCS = $150,000 + $200,000

NCS = $350,000