Question

Webster's has beginning net fixed assets of $684,218, ending net fixed assets of $679,426, and depreciation expense of $48,859. What is the net capital spending for the year if the tax rate is 25 percent? A. $42,920 B. $53,651 C. $44,067 D. $35,255 E. $48,600

Answer 1

Answer:

Option C is correct

What is the net capital spending for the year = $44,067

Explanation:

Net fixed assets at the end = Value of assets before depreciation- depreciation expense.

This can be re-rearranged as follows:

Value of asset before depreciation = Net fixed assets +depreciation

                                                       = 679,426+48,859= 728285

The net capital spending = Value of assets before depreciation - beginning net assets

                                         =$728,285 -

$684,218=44,067

What is the net capital spending for the year = $44,067

The tax rate has no relevance in the calculation.