If the Client Fails to Record Disposals of Property, Plant

question 69

Multiple Choice

If the client fails to record disposals of property, plant, and equipment, both the original cost of the asset account and the net book value will be incorrect.

• A) The original cost will be overstated indefinitely, and the net book value will be overstated until the asset is fully depreciated.
• B) The original cost will be overstated indefinitely, and the net book value will be understated until the asset is fully depreciated.
• C) Both will be overstated indefinitely.
• D) The original cost will be overstated indefinitely, and the net book value will be understated indefinitely.

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Definitions:

NPV Calculations

The process of determining the net present value of cash flows by discounting them to the present value using a specific rate.

Carbon Tax

A tax imposed on carbon dioxide emissions, designed to reduce the use of fossil fuels and lower greenhouse gas emissions.

Stock Dissipation Rate

The rate at which a stock or resource diminishes due to use or other factors.

Net Present Value

A method used in finance to assess the value of an investment by calculating the present value of its expected future cash flows minus the initial investment.