Answered

Rottweiler Obedience School’s December 31, 2021, balance sheet showed net fixed assets of $1,745,000, and the December 31, 2022, balance sheet showed net fixed assets of $2,080,000. The company’s 2022 income statement showed a depreciation expense of $325,000. What was the company's net capital spending for 2022?



Answer :

The company's net capital spending for 2022 was $335,000.

Net capital spending for a company can be calculated using the formula:

Net Capital Spending = Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation Expense

Beginning Net Fixed Assets (as of December 31, 2021) = $1,745,000

Ending Net Fixed Assets (as of December 31, 2022) = $2,080,000

Depreciation Expense for 2022 = $325,000

Plugging these values into the formula:

Net Capital Spending = $2,080,000 - $1,745,000 + $325,000

Net Capital Spending = $335,000

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