What Is the Formula to Value an Asset

question 41

Multiple Choice

What is the formula to value an asset?

• A) development costs + incremental risk = bottom line
• B) development costs + benefits + incremental risk = bottom line
• C) development costs + benefits = bottom line
• D) benefits + incremental risk = bottom lime

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Definitions:

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Depreciation Expense

The allocated portion of the cost of a tangible or physical asset that is charged as an expense over its useful life.

Operating Activities

Activities directly related to the business's primary operations, such as selling products or services, which are reflected in the company's cash flow.

Net Income

Net income is the total profit a company generates after subtracting all its expenses, taxes, and losses from its total revenue.