Which One of the Following Is the Correct Method for Computing

question 103

Multiple Choice

Which one of the following is the correct method for computing the net cash flow on the sale of a piece of equipment? (Assume that the equipment was the only asset in its CCA pool.)

• A) (Book value - selling price)(1 - Tc)
• B) (Book value - selling price)(Tc)
• C) (Selling price)(Tc)
• D) (Selling price - book value)(1 - Tc)
• E) (Selling price - book value)(Tc)

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Definitions:

Flexible Budget Sales

Sales projections within a flexible budget that adjust based on actual levels of activity, rather than being fixed.

Fixed Budget Sales

A financial plan that outlines expected sales for a period based on set conditions, without adjustments for variations in actual performance.

Standard Costs

Standard costs are predetermined costs established as targets for the production of goods or rendering of services, used as benchmarks to measure performance.

Actual Costs

The real expenses incurred or paid during a project or operation, as opposed to budgeted or estimated costs.