Mia Hero Shop Sold Its Table with a Book Value

question 276

Multiple Choice

Mia Hero Shop sold its table with a book value of $1,000 for $800.Mia Hero will record:

• A)a loss on the sale of $200.
• B)a gain on the sale of $200.
• C)depreciation expense of $200.
• D)cash received of $1,000.

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Definitions:

Capital Budgeting Technique

Methods used by companies to evaluate and select investments in long-term assets based on their potential to generate cash flows in the future.

Profitability Index

A financial metric used to evaluate the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment.

Payback Period

The duration required for an investment to generate cash flows sufficient to recover its initial cost.

AAR

Average Annual Return, which measures the average return generated by an investment per year over a specified period.