In the PP&E balance calculation, which formula correctly computes the ending PP&E given beginning PP&E, capex, and depreciation?

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Multiple Choice

In the PP&E balance calculation, which formula correctly computes the ending PP&E given beginning PP&E, capex, and depreciation?

Explanation:
PP&E ending balance reflects how the asset base changes with new purchases and the usage of assets over time. Capex adds to the asset pool, increasing the carrying amount, while depreciation reduces the carrying amount as the cost of assets is allocated over their life. Put together, ending PP&E = beginning PP&E + capex − depreciation. Using any option that subtracts capex or adds depreciation would misstate the asset balance, since those actions either shrink the asset base in the wrong direction or increase it unrealistically.

PP&E ending balance reflects how the asset base changes with new purchases and the usage of assets over time. Capex adds to the asset pool, increasing the carrying amount, while depreciation reduces the carrying amount as the cost of assets is allocated over their life. Put together, ending PP&E = beginning PP&E + capex − depreciation.

Using any option that subtracts capex or adds depreciation would misstate the asset balance, since those actions either shrink the asset base in the wrong direction or increase it unrealistically.

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