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Earnhardt Driving School’s 2018 balance sheet showed net fixed assets of $5 million, and the 2019 balance sheet showed net fixed assets of $5.6 million. The company’s 2019 income statement showed a depreciation expense of $210,000. What was net capital spending for 2019?

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tutordamola

Answer:

Net Capital Spending is $390,000

Explanation:

Net Capital Spending is the total amount of money a company spends on purchasing fixed asset(non-current asset or long-lived asset) during a period of time usually a year.

The formula for calculating Net Capital Spending is:

Closing fixed or non-current asset minus beginning fixed or non-current asset plus depreciation for the year.

Here, Closing fixed asset is $5.6million;

Beginningfixed asset is $5million;

Depreciation for the year is $210,000.

Therefore,$5,600,000 - $5,000000 + $210,000= $390,000

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