Why Should a Company Divide Up the Cost of a "Basket

question 103

Multiple Choice

Why should a company divide up the cost of a "basket purchase" among the different assets purchased?

• A)A company with a longer list of assets will appear to be stronger.
• B)Some of the assets might be paid for more quickly than others.
• C)The different assets might be depreciated over different useful lives.
• D)Baskets are not long-lived assets.

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Definitions:

Liquidity

This concept describes how easily an asset or security can be converted into ready cash without affecting its market price.

Asset Management

The approach to build, operate, preserve, and trade assets in a financially efficient manner.

Debt Management

The process of overseeing and handling the debt obligations of an individual or organization, including repayment strategies and structuring.

Return on Total Assets

A profitability ratio that measures the net income earned on total assets available within a company.