Net Fixed Assets and Depreciation On the balance sheet, the net fixed assets $($NFA$)$ account is equal to the gross fixed assets $($FA$)$ account $($which records the acquisition

cost of fixed assets$)$ minus the accumulated depreciation $($AD$)$ account $($which records the total depreciation taken by the firm against its fixed assets$).$ Using the fact that

NFA$=FA-AD,$ show that the expression given in the chapter for net capital spending, $NF{A}_{\text{e}\text{n}\text{d}}-NF{A}_{\text{b}\text{e}\text{g}}+D($where $D$ is the depreciation expense during the

year$),$ is equivalent to $F{A}_{\text{e}\text{n}\text{d}}-F{A}_{\text{b}\text{e}\text{g}}.$