The Rate of Return That Management Expects to Pay on All

question 94

Multiple Choice

The rate of return that management expects to pay on all borrowed and equity funds is the

• A) cost of capital.
• B) cutoff rate.
• C) hurdle rate.
• D) minimum rate.

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Definitions:

AASB 3

Specifies the accounting requirements for business combinations, detailing how an acquirer should recognize and measure the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree.

Revaluation

The process of adjusting the book value of a fixed asset or foreign currency to reflect current market values.

Inventory

The total amount of goods and materials held by a company intended for sale or production.

Gain on Bargain Purchase

The financial benefit that occurs when a company acquires another entity for a price below the fair value of its net assets.