If a Government Elects the Modified Approach with Regard to Capitalization

question 20

Multiple Choice

If a government elects the modified approach with regard to capitalization of infrastructure

• A) Costs to preserve infrastructure assets are expensed as incurred with no additional disclosure required.
• B) Costs to preserve infrastructure assets are expensed as incurred and disclosure of assessed condition is required.
• C) Costs to preserve infrastructure assets are capitalized as incurred and depreciated over the estimated useful with no additional disclosure required.
• D) Costs to preserve infrastructure assets are capitalized as incurred and are not depreciated, but disclosure of assessed condition is required.

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Definitions:

Profit-Maximization

Profit-maximization is the process by which a firm determines the price and output level that returns the greatest profit, focusing on key variables like sales and costs.

Economic Profit

The gap between the total income and the sum of explicit and implicit costs of a business.

Normal Rate

Refers to the standard or usual level at which a particular process occurs or is set, often used in financial contexts such as interest rates.

Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.