If a Company Were Going to Pledge Its Capital Assets

question 92

Multiple Choice

If a company were going to pledge its capital assets to a bank as collateral for a loan, which method of valuing the assets would be more useful to the bank?

• A)Fair value
• B)Replacement cost
• C)Net book value
• D)Historical cost

---

Definitions:

Geological Research

The scientific study of the Earth, including its composition, structure, processes, and history.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Tax Incentives

Financial benefits, such as reductions in taxes, provided by governments to encourage certain economic activities or investments.

High-Tech Manufacturing

A sector of industry that involves the production of goods using advanced technological processes and equipment, often associated with electronics, aerospace, and pharmaceuticals.