If the Market Value of an Asset Exceeds the Book

question 388

Multiple Choice

If the market value of an asset exceeds the book value of that asset, then the sale of the asset will:

• A) Generate taxable income.
• B) Result in a capital loss.
• C) Cause a cash outflow for the firm.
• D) Cause net profits to decline.
• E) Cause operating cash flows to decrease.

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Definitions:

O2

Symbol for oxygen, a vital element necessary for respiration in most living organisms.

Prostaglandins

Lipid compounds that have diverse hormone-like effects in animals, including mediating inflammation and pain.

Surfactant

A substance that reduces surface tension, allowing for the easier exchange of gases in the lungs and preventing alveolar collapse.

Manufacturing Firms

Companies that produce and sell goods using raw materials, labor, and machinery.