When Estimating the Useful Life of an Asset, Accountants Do

question 18

Multiple Choice

When estimating the useful life of an asset, accountants do NOT consider

• A) the cost to replace the asset at the end of its useful life.
• B) obsolescence factors.
• C) expected repairs and maintenance.
• D) the intended use of the asset.

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Definitions:

Price Skimming

A pricing strategy where a high initial price is set for a new product, gradually lowered over time as the market saturates.

Reference Prices

The prices that consumers consider reasonable and fair for a product.

Break-Even Point

The point at which the costs of producing a product equal the revenue made from selling the product.

Variable Costs

Costs that vary depending on the number of units produced or sold.