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, NFA end = NFA beg = D (where D is the depreciation expense during the year), is equivalent to FA end = FA beg .
Answer to relevant QuestionsKlingon Cruisers, Inc., purchased new cloaking machinery three years ago for $7 million. The machinery can be sold to the Romulans today for $5.2 million. Klingon's current balance sheet shows net fixed assets of $4.5 ...The 2009 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $2.4 million, and the 2010 balance sheet showed long-term debt of $2.5 million. The 2010 income statement showed an interest expense of $195,000. ...In addition to common-size financial statements, common-base year financial statements are often used. Common-base year financial statements are constructed by dividing the current year account value by the base year account ...Redo Problem 23 using sales growth rates of 30 and 35 percent in addition to 20 percent. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine the relationship between them. The most recent financial statements for Incredible Edibles, Inc., are shown here (assuming no income taxes): Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales ...
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