Fixed Capital Investment Computation

CFA Level II Equities
#1

FCInv = Capital expenditures - Proceeds from sales of long-term assets

OR

FCInv = Ending Net PPE - Beginning Net PPE + Depreciation - Gain on Sale

The second formula is equating ‘Gain on Sale’ with ‘Proceeds from sales of long-term assets’.

However, won’t the two differ in a lot of cases? If I sell an asset with a book value of $100, for a price of $120, my proceeds should be $120, but my gain on sales should be $20.

Schweser makes this statement, ‘If sales proceeds are not given directly, find gain on asset sales from the income statement.’

I find this a bit illogical. Gains on asset sales COULD equal proceeds, but that does not have to be the case

#2

No, it isn’t.

And what’s Ending Net PP&E − Beginning Net PP&E + Depreciation in this case?

#3

Got it. I assumed that it represents Capex.

#4

Im very slow… and this topic is my exact question… can you spell this out for me further as I am having difficulty understanding. Is Capital Expenditures = Ending Net PPE - Beg. Net PPE + Depreciation? If so, why is the top forumula subtracting Proceeds while the bottom forumala is subtracting gain?

#5

Would you be able to offer more guidance on this?