Under Utility Regulatory Accounting Principles (RAP), the Account "Utility Plant

question 56

Multiple Choice

Under utility regulatory accounting principles (RAP) , the account "Utility Plant Acquisition Adjustment" reflects:

• A) The difference between the amount paid for utility plant and the amount originally paid by the utility that first placed the plant into public service, less accumulated depreciation.
• B) The difference between the fair market value of the utility plant and the amount paid for it, less accumulated depreciation.
• C) The difference between the amount paid for the utility plant less its current replacement cost.
• D) The difference between the amount paid for the utility plant less the fair market value of its tangible plant assets.

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Definitions:

Variable Costing

An accounting method that only considers variable costs in the calculation of product or service costs, excluding fixed costs.

Net Operating Income

The profit a company makes from its regular business operations, excluding non-operating income and expenses.

Units

A standard quantity of a product, used in various contexts such as measurement, accounting, or inventory control.

Variable Costing

A management accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold.