Chapter 2, Problem 27QP

Summary Introduction

To prove: That ${\text{NFA}}_{\text{end}}-{\text{NFA}}_{\text{beg}}+\text{D}$ is equivalent to ${\text{FA}}_{\text{end}}-{\text{FA}}_{\text{beg}}$

Where,

NFA_end refers to the net fixed assets at the end of the year

NFA_beg refers to the net fixed assets at the beginning of the year

D refers to the depreciation

FA_end refers to the gross fixed assets at the end of the year

FA_beg refers to the gross fixed assets at the beginning of the year

Introduction:

Net fixed assets refer to the asset value of the company after charging depreciation. Depreciation refers to the reduction in the value of an asset. It also refers to method of apportioning the cost of the asset over its beneficial life.