Which of the Following Best Illustrates an Example of a Life

question 89

Multiple Choice

Which of the following best illustrates an example of a life cycle cost?

• A) The economic and environmental costs to produce, use and dispose of a refrigerator
• B) The costs to water systems of making a watch
• C) The retail and disposal price of a new car
• D) The net cost to build a bicycle
• E) The cost of component parts charged to clients by industry to make a computer

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Definitions:

Economic Life

The period over which an asset is expected to be usable for its intended purpose.

Inflation On Fixed Assets

The impact of rising prices (inflation) on the purchasing power and value of fixed assets over time, affecting their replacement cost and depreciation calculations.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards, guidelines, and procedures used in the United States for financial reporting.

Straight-Line Depreciation

A method for calculating the annual depreciation expense by equally distributing the cost of an asset minus its salvage value over its estimated useful life.