Which of These Is an Example of an External Cost

question 47

Multiple Choice

Which of these is an example of an external cost?

• A)an increase in the value of land you own when a nearby development is completed.
• B)the costs paid by a company to build an automated factory.
• C)decreased property values in a neighbourhood where several houses are burglarized.
• D)the higher price you pay when you buy a heavily advertised product.

---

Definitions:

Revaluation Accounting

A method under International Financial Reporting Standards (IFRS) that allows an entity to adjust the book value of its assets and liabilities to their fair value.

Tangible Assets

Physical assets that have a form you can touch or handle, like buildings, machinery, and land.

Acquirer

The entity that obtains control of another entity (acquiree) in a business combination, typically through the purchase of its equity interests or assets.

Negative Goodwill

Occurs when the price paid for an acquisition is less than the fair market value of its net tangible assets, often recognized as a gain in the acquirer's financial statements.