Teddys Pillows had beginning net fixed assets of 464 and end

Teddy\'s Pillows had beginning net fixed assets of $464 and ending net fixed assets of $536. Assets valued at $312 were sold during the year. Depreciation was $28. What is the amount of net capital spending? $252 $72 $100 $44 $412

Solution

The Correct answer is $100

Net Capital Spending can be defined as the difference between the ending value of fixed assets and beigining value of fixed assets and depreciation expenses added to it. It shows the net capital expenditure made on fixed assets.

Net Capital Spending = Ending Fixed Assets - Begining Fixed Assets + Depreciation

Where Ending Fixed Assets is $536

Begining Fixed Assets = $464

Depreciation = $28

Therefore Net Capital Spending

= $536 - $464 + $28

= $100

Note - Assets sold during the year will not be considered while calculating net capital spending as the value is already included in Ending net fixed assets.