Incremental Cash Flow Approach

question 29

Multiple Choice

Incremental cash flow approach:

• A) Analyzes the additional cash inflows and outflows for a specific decision
• B) Is not useful for decision-making
• C) Is a search for as many cash flows as possible so they can all be used in decision-making.
• D) Includes unavoidable cash flows

---

Definitions:

Fair Value

The fair market price of an asset, reflecting its current value under normal market conditions.

Excess Land Allocation

The process of assigning a portion of the purchase price of a combined investment in land and building to the land, often when the portion allocated is above the fair value.

Noncontrolling Interest

An ownership interest in a company that is less than 50%, indicating that the holder does not have control over the company's operations.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, often used to estimate a company's net worth.