Question

A Corporation had net fixed assets of $2,000,000 at the end of 2019 and $1,800,000 at the end of 2018. In addition, the firm had a depreciation expense of $200,000 during 2019 and $180,000 during 2018. Using this information, the corporation's net fixed asset investment for 2019 was

Answer 1

Answer:

$400,000

Explanation:

The movement in the fixed asset balance between the start and end of a period is as a result of additions to fixed assets in form of acquisitions and the depreciation over the same period.

This may be expressed mathematically as

opening balance + acquisitions - depreciation = closing balance

As such,

$1,800,000 + Acquisitions - $200,000 = $2,000,000

Acquisitions

= $2,000,000 - $1,600,000

= $400,000

The corporation's net fixed asset investment for 2019 was $400,000.

Answer 2

Answer:

Asset Account entries:

Opening Net balance (2019) $2,000,000

Less depreciation (2019) -$200,000

Closing net balance (2019) $1,800,000

Opening Net balance (2020) $1,800,000

Add investment in Assets ?

Less depreciation (2020) -$180,000

Closing net balance (2020) $1,800,000

Investment in Assets (2020) = closing net Assets + depreciation - opening net assets

= $1,800,000 + $180,000 - $1,800,000

= $180,000.