The Historical Cost Principle Requires That When Assets Are Acquired

question 46

Multiple Choice

The historical cost principle requires that when assets are acquired, they are recorded at

• A)appraisal value.
• B)cost.
• C)market price.
• D)book value.

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Definitions:

Cost of Capital

The rate of return that a company must earn on its project investments to maintain its market value and attract funds.

Cutoff Rate

A specific point or standard used for decision-making, often concerning the minimum accepted return on investment.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.