For the Case of an Electric Car Project, Which of the Following

question 38

Multiple Choice

For the case of an electric car project, which of the following costs or cash flows should be categorized as incremental when analyzing whether to invest in the project?

• A)The cost of research and development undertaken for developing the electric car during the past three years
• B)The annual depreciation charge
• C)Tax savings resulting from the depreciation charges
• D)Dividend payments

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Definitions:

Manufacturer/Dealer Lessors

Entities that lease out assets they manufacture or sell, as part of their main business operations, to earn income and stimulate demand for their products.

Selling Profit

The financial gain achieved from selling goods or services, calculated as sales revenue minus the cost of goods sold and associated selling expenses.

Initial Direct Costs

Expenses directly associated with acquiring or originating a new loan or lease, including commissions, legal fees, and internal costs that are incremental and directly attributable to the transaction.

AASB 16

The Australian Accounting Standards Board standard that specifies the principles for recognition, measurement, presentation, and disclosure of leases.