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 |