Gross PP&E vs. Net PP&E

CFA Level II
#1

What’s the difference between Gross PP&E vs. Net PP&E? Only Depreciation?

Thanks.

#2

yes

#3

OK, so help me out, please. To calculate FCInv, I have the following methods. Let me know if I’ve got it right, please:

  1. FCI= Capital Expenditures - Proceeds from sales (off the statement of cash flows)

  2. FCI = Ending Gross PPE - Beginning Gross PPE (this is just your Capex figure)

  3. Ending Net PPE - Beginning Net PPE + Depreciation

So what do we do if we’re given Beginning and Ending PPE, Depreciation, and proceeds from sales, along with a tax rate? I’m guessing it’s:

Ending Net PPE - Beginning Net PPE + Depreciation - Proceeds from sales

Please let me know, I tend to be getting this wrong about half the time in practice sets. Thanks.

#4

you don’t subtract the proceeds from sales, you subtract the value of PP&E that was sold. everything else is right. you don’t have to worry about a tax rate while calculating gross PP&E

#5

Thanks, Blademaster3090

#6

Remember to watch out for Asset Impairment…too