The Stand-Alone Principle Means That

question 86

Multiple Choice

The stand-alone principle means that:

• A) projects should not be evaluated against one another
• B) projects must operate independently of the firm's other projects
• C) analysts should focus on the project's cash flows, uncontaminated by cash flows from the firm's other activities
• D) projects should be rejected that have the same IRR

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Definitions:

Intangible Capital Asset

Non-physical assets, such as patents, copyrights, trademarks, and goodwill, that have value due to the rights or advantages they bring to a business.

Consolidated Financial Statement

A comprehensive financial report that combines the financial results of a parent company and its subsidiaries, presenting it as a single economic entity.

Fair Value Increment

The increase in the fair value of an asset over its previous book value, often recognized in the course of business combinations or revaluations.

Capital Assets

Long-term assets acquired or owned by a company that are used in its operations to generate income.