Which of the Following Statements Regarding Long-Term Operating Assets Classified

question 100

Multiple Choice

Which of the following statements regarding long-term operating assets classified as held for disposal is false?

• A) Long-term operating assets classified as held for disposal are valued at net realizable value.
• B) Companies do not depreciate long-term operating assets classified as held for disposal.
• C) If the company writes down the asset in one period, the company can report an increase in value in the subsequent period up to, but not exceeding, the carrying value before the write-off.
• D) Companies must report individual long-term operating assets classified as held for disposal separately on the balance sheet, if material in amount.

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Definitions:

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as rent or salaries.

Sunk Costs

Costs that have already been incurred and cannot be recovered or refunded, and thus should not factor into future decision-making processes.

Fixed Costs

Fixed expenditures that are unaffected by changes in production or sales volumes, like rent, wages, and insurance costs.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.