Byron Limited Estimated the Net Present Value of Future Cash

question 16

Multiple Choice

Byron Limited estimated the net present value of future cash flows from specialised equipment acquired under a business combination to be $120 000. A replacement cost for the equipment is estimated to be $132 000. The equipment has been independently appraised at a value of $122 000. A similar item of equipment cost the acquirer $118 000 last year. What is the value for recognition of the equipment under a business combination?

• A) $118 000.
• B) $122 000.
• C) $120 000.
• D) $132 000.

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Definitions:

Annual Reports

are comprehensive reports issued by companies at the end of their fiscal year, detailing their financial performance, operations, and future outlook.

Throughput Standards

Benchmarks or measures used to evaluate the efficiency of a process by assessing the amount of output produced over a given period of time.

Actual Performance

The real, observed output or results of an individual, organization, or system’s activities.

Desired Performance

The expected or targeted level of output or efficiency from a process, employee, or system.