The Difference Between the Historical Cost and the Net Book

question 118

Multiple Choice

The difference between the historical cost and the net book value (NBV) of a plant asset is the:

• A) Residual value of the asset.
• B) Depreciation expense for the current period.
• C) An estimate of the remaining useful life of the asset.
• D) Accumulated depreciation expense on the asset.
• E) Estimated replacement cost of the asset.

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Definitions:

Means of Production

The resources—including land, labor, capital, and technology—used to produce goods and services in an economy.

Capital

Wealth in the form of money or assets, used in the production of more wealth.

Depression

An extended period of significant decline in economic activity across an economy, characterized by high unemployment, low consumer spending, and reduced industrial output.

Full Employment

A situation in an economy where all available labor resources are being used in the most economically efficient way, often characterized by the absence of cyclical unemployment.