Schweser (R31) Challenge Problem 22 - Gross PPE vs Net PPE

CFA Level II Equities
#1

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.)

#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.

#3

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

#4

for that particular question, both methods ended up with the same amount though.