Why this is mistaken
Corrective approach
Reconcile gross PP&E first. Reconcile accumulated depreciation and impairment on a second schedule. Derive net PP&E only after both schedules tie. Then bridge gross additions to cash paid and supported noncash amounts. A net balance change cannot identify cash spending by itself.
Where to watch
When this mistake may appear
- Beginning and ending net PP&E and one capital-expenditure subtotal are available.
Check your work
Your work may contain this mistake if:
- Uses ending net PP&E less beginning net PP&E as cash capital expenditure.
- Reconciles only net PP&E and omits gross cost and accumulated amounts.
- Treats every gross addition as current-period cash paid.