On the statement of financial position, 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, NFAend - NFAbeg + D (where D is the depreciation expense during the year), is equivalent to FAend - FAbeg.
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