Net Investment in Capital Assets was $1,200,000 on December 31, 2015. During 201

ID: 2557698 • Letter: N

Question

Net Investment in Capital Assets was $1,200,000 on December 31, 2015. During

2016, the following occurred:
? Issued $1,000,000 bonds for construction of Capital Assets
? Materials, labor, and overhead of $900,000 went into Construction In
Progress. Transferred $850,000 of Construction in Progress to Capital Assets.
? Paid $100,000 principal and $60,000 interest on the bonds.
? Recorded depreciation expense of $125,000
What amount was Net Investment in Capital Assets at December 31, 2016?
A. $1,025,000 B. $1,075,000 C. $1,135,000 D. $1,925,000

Explanation / Answer

Answer

D. $1,925,000

Solution:

Net Investment in Capital Assets

Beginning Balance

$1,200,000

Additions in capital assets

(Transferred Construction in

Progress to Capital Assets.)

$850,000

Less: Depreciation expense

$125,000

Ending Net Investment in Capital Assets at December 31, 2016

$1,925,000