Critics of the Huge Net Returns On, for Example, Oil

question 203

Multiple Choice

Critics of the huge net returns on, for example, oil production will claim that the returns are

• A)interest on the capital investment.
• B)rents on a natural resource.
• C)profits on entrepreneurial activity.
• D)exorbitant and should be taxed away.

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Definitions:

Fair Value

The amount one would get for selling an asset or the cost to transfer a liability in a regulated exchange among market players on the date of valuation.

Impairment Loss

A recognized reduction in the recoverable amount of a fixed asset or goodwill, indicating that it exceeds its recoverable amount.

Deferred Income Taxes

The accounting concept that recognizes the tax effect of transactions in different periods than when the transactions actually occur.

Effective Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total tax paid by the taxable income.