Question

Which of the following do you NOT include when calculating the closing balance of PP&E?

a) Cash capital expenditures
b) PP&E acquired through acquisitions
c) PP&E acquired under capital or financing leases
d) Changes in working capital

Answer 1

d) Changes in working capital

Step-by-step explanation:

the formula used for calculating net PP&E is:

Net PP&E = gross PP&E + capital expenditures - accumulated depreciation

PP&E represents fixed assets (plant, property, and equipment).

On the other hand, working capital involves current assets and liabilities such as cash, accounts receivables, accounts payable, inventories, taxes payable, etc.