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Q: Finance ( Answered 5 out of 5 stars,   0 Comments )
Question  
Subject: Finance
Category: Business and Money > Finance
Asked by: baseball2-ga
List Price: $3.00
Posted: 13 Apr 2005 12:46 PDT
Expires: 13 May 2005 12:46 PDT
Question ID: 508877
Could someone provide me with a calculation on how to calculate a
companys gross invetment in plant and equipment. I have the balance
sheet I just need help with a formula! Need answer by tomorrow if
possible!
Answer  
Subject: Re: Finance
Answered By: websearcher-ga on 13 Apr 2005 13:19 PDT
Rated:5 out of 5 stars
 
Hi baseball2:

Thanks for the interesting question. 

The formula for gross investment in plant and equipment for a
particular period is fairly simple:

gross investment in plant and equipment = net increase in fixed assets
+ depreciation expense

So if during the period a company bought $200,000 in plant and
equipment, sold $40,000 in plant and equipment and had depreciation
expenses of $25,000, then

gross investment in plant and equipment = ($200,000 - $40,000) + $25,000
                                        = $185,000

Some sites that back this up:

Solutions to Chapter 2 - Accounting and Finance
URL: http://cob.isu.edu/byerstev/MBA%20622/Homework%20Solutions.doc
Quote: "Net fixed assets increased by $800,000 during 2000, while
depreciation expense in 2000 was $520,000.  Therefore, gross
investment in plant and equipment was $1,320,000."

Professor Sears - FIN 3320 (Honors) - Spring 2005 - Lecture Notes - Chapter 2
URL: http://finance.ba.ttu.edu/sears/3320%20Spg%2005/NEW%20CHAPTER2.DOC
Quote: Gross investment in operating capital = Net investment
+	Depreciation and amortization

Search Strategy (on Google):
* "gross investment in plant and equipment" calculate OR formula
* "net fixed assets" increase depreciation "gross investment"

I hope this helps. 

websearcher
baseball2-ga rated this answer:5 out of 5 stars

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