As I understand it:
FCINV = CHG IN NET PPE + DEPRECIATION
or
FCINV = CHG IN GROSS PPE
However, I noticed that when you solve this problem both ways you get two different answers for FCINV:
FCINV = 96-60+27 = 63 (This is the correct answer per Schweser)
FCINV = 136-90 = 46
Did anyone else notice this or am I missing something?
(I know you have to also deduct the gain on the sale, but I’m talking about before that.)
cpk123
April 24, 2017, 12:20am
#2
You cannot just do the Change in Gross PPE … remember you could have bought and sold some amount of PPE - which would all show up in the Gross PPE numbers.
The right way is Change in Net PPE + Depreciation. in the current period.
That works for me, but problem 21 in reading 31 of the curriculum uses:
FCInv = Increase in gross fixed assets = 4,275 - 3,752
So for anyone else, that equation should be ignored and the correct way to calculate FCInv is:
FCInv = Change in Net PPE + Depreciation = 3,099 - 2,846 + 270
Edbert
April 25, 2017, 1:14pm
#4
for that particular question, both methods ended up with the same amount though.