CF Statement - Net PPE Question net, equipment, following, investing, provided

sweetgirl

ABC Ltd provided the following information related to its long term assets:



Year 1 Year 2
Plant and equipment $780,000 $700,000
Accumulated dpn ($224,000) ($230,000)

Dpn expense $43,000 $31,000
Gain on sale of equipment - $22,000

There were no purchases of plant and equipment during the year. Gulf Plane's net investing cash flows for Year 2 is closest to:
A) $33,000
B $77,000
C) $108,000

THe answer is B)

- In Schweser notes they ignore Accumulated depreciation in their calculation of Net Investing cash flows. Why do we include them in the calculation here.
- The calculation of Original net BV is 780,000-224,000 - 31,000 = 525,000 and BV of Year 2 is simply 700,000-230,000 = $470,000. Why is it that we subtract Year 2's dpn expense from the original bookvalue and not the Year 1 dpn expense? Why is dpn expense each year not included in accumulated dpn for the year? is it because Depreciation expense is listed for the previous year??

Please somebody clear this up for me.

Thanks